Knowledge that Transforms

I introduce the special section highlighting the background of the competition and the work of the finalists in the 2013–2014 Gary L. Lilien ISMS-MSI Practice Prize Competition, showcasing the best applications of rigor and relevance by marketing scientists in working with practical problems. The winning paper is by a team who developed an innovative pricing tool to enable an electric utility operating in Germany to acquire customers on online price comparison sites while optimizing various metrics of interest. The other two finalists comprise a team that developed an integrated marketing model to address multiple business objectives of the Georgia Aquarium and a team that developed a marketing science model of evaluation and purchase intentions incorporating customer emotions to test advertisement effectiveness for Kmart Australia.

The final term of Preyas S. Desai as editor-in-chief of the journal Marketing Science will end on December 31, 2015. Based on recommendations from the INFORMS Publications Committee, the president of INFORMS has appointed a committee to conduct a full search for a new editor-in-chief. The committee intends to propose a candidate for approval by INFORMS no later than July 1, 2015. All members of INFORMS are invited to participate in this process. The committee seeks your opinions and comments on (1) the current state of the journal, (2) recommendations for change, if any, and (3) candidates for editor-in-chief. Qualifications for the editor-in-chief of Marketing Science will include • A demonstrated interest in a broad range of topics in the field • A demonstrated record of research in the field • Dedication and enthusiasm for Marketing Science • Significant editorial experience • Vision of the role of scholarly publications in the electronic age • Commitment to the workload involved • Ability to effectively and efficiently manage the editorial process Further information about the journal is available at the Marketing Science website: http:// pubsonline.informs.org/journal/mksc. Members of the search committee are Kannan Srinivasan (Chair), Carnegie Mellon University; Pradeep K. Chintagunta, University of Chicago; Peter S. Fader, University of Pennsylvania; Dominique M. Hanssens, UCLA; and Juanjuan Zhang, Massachusetts Institute of Technology. Please submit comments, nominations, and applications by April 15, 2015. The information may be sent (preferably by email) to Kannan Srinivasan, Chair of the Marketing Science Editorial Search Committee.

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-in-chief, 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-in-chiefs, guest associate editors, and ad hoc reviewers who served from January 1, 2014 to December 31, 2014. Finally, let us not forget to thank the authors. Marketing Science requires and receives outstanding submissions from many leading researchers and prestigious organizations. Preyas S. Desai Duke University

Using the University of Texas at Dallas database on publications in the top 24 business journals, we examine the evolution of Marketing Science as reflected by participation of faculty from top ranked business schools on one hand, and diversity on the other hand, as evidenced by contributions from different countries and from faculty of a wider set of schools. We show that faculty from top-ranked business schools have always published in Marketing Science, and continue to do so. We also show that the variety of schools with authors who publish in Marketing Science has increased, and that much of this expansion has occurred outside of North America. This international expansion appears to be driven by collaborations between authors in North America and those in other areas. One of the factors that may be fueling the increase in the variety of schools with authors publishing in Marketing Science is an increased tendency for collaboration by three or more authors. In general, Marketing Science has remained an outlet for authors from top schools, and has also become a place where authors from a much broader array of schools, especially those outside the United States, can publish. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2015.0957 .

This paper addresses the repositioning of Kmart Australia in 2011. It shows how by calibrating emotional as well as cognitive reactions and estimating their impact on purchase intentions, Kmart was able to focus its communications, improving market share. We measure nine key emotions, ranging from surprise to anger. Including these emotions significantly improves our model for likelihood to choose a store. Measuring emotions enabled Kmart’s advertising agency to create a television commercial that tapped into the specific emotions that most strongly predict the likelihood to choose a store; that is, the model drove the development of the advertising creative. The resulting television commercial tested well and was effective when launched. At the individual level, cognitions and emotions changed dramatically. At the aggregate level, an econometric model showed that store visits were significantly enhanced. Kmart’s EBIT (earnings before interest and tax) increased by 30%, whereas Kmart’s main rival had almost no EBIT growth, despite vigorous attempts to counter Kmart’s campaign. One of our key contributions is to incorporate emotions into marketing science models of evaluation and purchase intentions. We also provide a new methodology to measure emotions. The approach enables marketing science to participate in the design of marketing stimuli, rather than just testing preexisting ones. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2015.0954 .

The window between a film’s theatrical and video releases has been steadily declining with some studios now testing day-and-date strategies (i.e., when a film is released across multiple channels at once). We present a model of consumer choice that examines trade-offs between substitutable products (theatrical and video forms), the possibility of purchasing both alternatives, a congestion externality affecting consumption at theaters with heterogeneous consumer groups, and a decay in the quality of the content over time. Our model permits a normative study of the impact of shorter release windows (zero–three months) for which there is a scarcity of relevant data. We characterize the market conditions under which a studio makes video release time and price selections indicative of direct-to-video, day-and-date, and delayed video release tactics. During seasons of peak congestion, we establish that day-and-date strategies are optimal for high-quality films with high content durability (i.e., films whose content tends to lead consumers to purchase both alternatives) whereas prices are set to perfectly segment the consumer market for films with low content durability. We find that lower congestion effects provide studios with incentives to delay release and price the video to induce multiple purchasing behavior for films with higher content durability. However, an increase in congestion effects can, in certain cases, actually lead to higher studio profitability. We also show that, at the lower range of quality, an increase in movie quality should often be accompanied by a later video release time. Surprisingly, however, we observe the opposite result at the upper range of movie quality: an increase in quality can justify an earlier release of the video.

Recently there has been significant interest in studying consumer behavior in sponsored search advertising (SSA). Researchers have typically used daily data from search engines containing measures such as average bid, average ad position, total impressions, clicks, and cost for each keyword in the advertiser’s campaign. A variety of random utility models have been estimated using such data and the results have helped researchers explore the factors that drive consumer click and conversion propensities. However, virtually every analysis of this kind has ignored the intraday variation in ad position. We show that estimating random utility models on aggregated (daily) data without accounting for this variation will lead to systematically biased estimates. Specifically, the impact of ad position on click-through rate (CTR) is attenuated and the predicted CTR is higher than the actual CTR. We analytically demonstrate the existence of the bias and show the effect of the bias on the equilibrium of the SSA auction. Using a large data set from a major search engine, we measure the magnitude of bias and quantify the losses suffered by the search engine and an advertiser using aggregate data. The search engine revenue loss can be as high as 11% due to aggregation bias. We also present a few data summarization techniques that can be used by search engines to reduce or eliminate the bias.