Knowledge that Transforms

Consumer preferences change through time and firms must adjust their product positioning for their products to continue to be appealing to consumers. These changes in product positioning require fixed investments such that firms reposition only occasionally. I construct a model that can include predictable and unpredictable consumer preference changes, and where a firm optimally repositions its product given the current market conditions, and expected future repositionings. When unpredictable consumer preferences evolve away from a current firm’s positioning, the decision to reposition is like exercising an option to be closer to current consumer preferences, or waiting to reposition later or for those preferences to return so as to be closer to the firm’s current position. We characterize this optimal repositioning strategy, how it depends on the discount factor, variance of preferences, and repositioning costs. I compare the optimal policy of the firm with what could be optimal from a social welfare point of view, and find that the firm repositions more frequently than is efficient when there is full market coverage. With predictable changes in consumer preferences, the optimal repositioning strategy involves overshooting and asymmetric repositioning thresholds. The online appendix is available at https://doi.org/10.1287/mksc.2017.1075 .

In various cultural and behavioral respects, emerging market consumers differ significantly from their counterparts of developed markets. They may thus derive consumption utility from different aspects of product meaning and functionality. Based on this premise, we investigate whether the economic rise of emerging markets may have begun to impact the typical one-size-fits-all design of many international product categories. Focusing on Hollywood films, and exploiting a recent relaxation of China’s foreign film importation policy, we provide evidence suggesting that these impacts may exist and be nonnegligible. In particular, we show that the Chinese society’s aesthetic preference for lighter skin can be linked to the more frequent casting of pale-skinned stars in films targeting the Chinese market. Implications for the design of international products are drawn. Data and the online appendix are available at https://doi.org/10.1287/mksc.2018.1089 .

Online search intermediaries, such as Amazon or Expedia, use rankings (ordered lists) to present third-party sellers’ products to consumers. These rankings decrease consumer search costs and increase the probability of a match with a seller, ultimately increasing consumer welfare. Constructing relevant rankings requires understanding their causal effect on consumer choices. However, this is challenging because rankings are endogenous: consumers pay more attention to highly ranked products, and intermediaries rank the most relevant products at the top. In this paper, I use the first data set with experimental variation in the ranking from a field experiment at Expedia to make three contributions. First, I identify the causal effect of rankings and show that they affect what consumers search, but conditional on search, do not affect purchases. Second, I quantify the effect of rankings using a sequential search model and find an average position effect of $1.92, which is lower than literature estimates obtained without experimental variation. I also use model predictions, data patterns, and a feature of the data set (opaque offers) to show rankings lower search costs, instead of affecting consumer expectations or utility. Finally, I show a utility-based ranking built on this model’s estimates benefits consumers and the search intermediary. Data and the online appendix are available at https://doi.org/10.1287/mksc.2017.1072 .

In the digital economy, influencing and controlling the spread of information is a key concern for firms. One way firms try to achieve this is to target firm communications to consumers who embrace and propagate the spread of new information on emerging and “trending” topics on social media. However, little is known about whether early trend propagators are indeed responsive to firm-sponsored messages. To explore whether early propagators of trending topics respond to advertising messages, we use data from two field tests conducted by a charity and an emerging fashion firm on the microblogging service Twitter. On Twitter, “promoted tweets” allow advertisers to target individuals based on the content of their recent postings. Twitter continuously identifies in real time which topics are newly popular among Twitter users. In the field tests, we collaborated with a charity and a fashion firm to target ads at consumers who embraced a Twitter trend early in its life cycle by posting about it, and compared their behavior to that of consumers who posted about the same topic later on. Throughout both field tests, we consistently find that early propagators of trends are less responsive to advertising than consumers who embrace trends later. Data and the online appendix are available at https://doi.org/10.1287/mksc.2017.1062 .

We propose a new strategy for proactive churn management that actively uses social network information to retain consumers.

Instead of purchasing individual content, streaming adopters rent access to libraries from which they can consume content at no additional cost. In this paper, we study how the adoption of music streaming affects listening behavior. Using a unique panel data set of individual consumers’ listening histories across many digital music platforms, adoption of streaming leads to very large increases in the quantity and diversity of consumption in the first months after adoption. Although the effects attenuate over time, even after half a year, adopters play substantially more, and more diverse, music. Relative to music ownership, where experimentation is expensive, adoption of streaming increases new music discovery. While repeat listening to new music decreases, users’ best discoveries have higher play rates. We discuss the implications for consumers and producers of music. Data and the online appendix are available at https://doi.org/10.1287/mksc.2017.1051 .

Marketing Science greatly benefited from the admirable and fastidious efforts of more than 200 different individuals who provided manuscript reviews last year. Beyond those individuals already recognized on the editorial board, the editor-in-chief and guest editors of Marketing Science are indebted to the many guest editors, guest associate editors, and ad hoc reviewers who provided expert counsel and guidance on a voluntary basis. The following list acknowledges the contribution of guest editors, guest associate editors, and ad hoc reviewers who served from January 1, 2016 to December 31, 2016. Finally, our sincere appreciation to the authors, whose outstanding submissions and careful revisions make the journal the go-to resource for leading edge knowledge in quantitative marketing. Marketing Science mourns the loss of Professor Frankel ter Hofstede, University of Texas at Austin, who passed away in an untimely accident in December 2016. The marketing science community has lost a wonderful scholar, colleague, and friend. K. Sudhir Yale University