Knowledge that Transforms

This report summarizes the entrants in the 2018 ISMS Gary Lilien Marketing Science Practice Prize Competition, designed to identify, encourage, recognize, and reward the application of impactful marketing science to industry and noncommercial settings. These applications aim to showcase innovative and impactful examples of applications demonstrating the best of rigor and relevance that our profession produces. The winner described an application of econometric and experimental techniques at the French-based retailer of body, face, fragrances, and home products, L’Occitane, aimed to optimize budget allocation between online and off-line marketing expenditure across six countries. The other three finalists include a decision support aid to assist members of the United Services Automobile Association (a not-for-profit organization to assist military service personnel select and finance their automobile purchases) choose vehicles that balance their individual tastes and preferences with their financial circumstances, a business-to-business pricing decision support aid for use by the sales force of Hadco Metal Trading to avoid loss of margin by undercharging and loss of business by overcharging, and a methodology to test online advertisements cost-effectively by generating “ghost ads” as a way of minimizing control group costs in a reliable and valid way.

Aggregators are facing increased scrutiny by regulatory authorities, suggesting these sites have considerable market power. On the other extreme, firms are bypassing aggregators, choosing instead to sell directly to consumers. This raises the question as to which party has more market power: the aggregator or the individual firm. Focusing on the airline industry, we investigate who benefits most in the airline-aggregator relationship. Specifically, we ask what would happen to airline and aggregator site visits and purchases in the absence of a comprehensive aggregator. We first explore consumers’ search patterns on Southwest, an airline that has never been part of any aggregator. In a descriptive exercise, we find that consumers who book on Southwest are the least likely to visit aggregator sites. Second, we use the 2011 American dispute with Orbitz as an exogenous event, which led to American fares no longer being displayed on Orbitz for five months. We use this dispute to identify who was hurt the most—the aggregator or the airline—in the months following the dispute. Our findings indicate the aggregator loses the most when it is not comprehensive.

This paper develops a model in which a supply relationship can sustain higher effort levels if firms use cross-subsidized pricing.

An empirical examination of the impact of category captaincy on assortments and prices

We empirically examine the redistributive effects of higher minimum quality standards on consumer welfare. More specifically, we study the impact of the European Union's ban on battery eggs, the previous minimum quality standard, on household egg purchases and evaluate its redistributive effect on consumer welfare.