Marketing strategy; game theory; fairness concerns; exclusivity seeking; signalling quality
This dissertation consists of two essays in which I study the impact of two interdependent consumer behaviors, fairness concerns and exclusivity seeking, on a companys marketing strategies and profits specifically in a context where it tries to expand its clientele with the objective of generating repeat purchases, for example by running deals on daily deal platforms. In the first essay, I examine the impact of customers fairness concerns on the profitability of a company running promotions on daily deal platforms. With the prevalence of social media and the internet, information about such targeted promotions can become available to all consumers including those who did not have access to the platform and paid a full-price. Conducting a laboratory experiment, I demonstrate that knowledge about targeted promotions often leads to post-promotional fairness concerns among these consumers resulting in an increased tendency to switch providers. Incorporating the results of the experiment in a two-period game-theoretic model I analyze the impact of customers post-promotional fairness concerns on the profits of quality differentiated companies who compete by running targeted promotions. I find that the low quality provider always suffers from consumers sensitivity to unfairness. Contrary, I show that the high quality provider can counterintuitively benefit from consumers fairness concerns as long as its quality advantage is not too large. Furthermore, I analyze how profits are impacted when information about the targeted deals leaks to non-targeted customers who would have bought at the regular price. I find that, counterintuitively, competing firms profits increase with leakage. In the second essay of this dissertation, I start with the observation that many platform members are new customers and are uncertain about the quality of the companys product or service until they consume it. In such a context, I examine a high quality sellers optimal signaling strategy in a market where consumers prefer to purchase a scarce product due to desire for exclusivity or to receive a service in a non-crowded environment due to better experience and service delivery. Utilizing a repeat purchase signaling model I show that, consistent with prior literature, the high quality firm signals its quality by making its product scarce as well as charging a high price when consumers desire for exclusivity is high and cost of quality is great. Contrary, I also find conditions under which the high quality firm counterintuitively makes its product widely available and prices it low to signal its quality. The model may in part explain how high quality sellers market their products or services on daily deal websites.
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Doctor of Philosophy (Ph.D.)
College of Business Administration
Business Administration; Marketing
Length of Campus-only Access
Doctoral Dissertation (Open Access)
Business Administration -- Dissertations, Academic; Dissertations, Academic -- Business Administration
Talebi Ashoori, Minoo, "Essays on Marketing Strategies in the Context of Interdependent Consumption" (2015). Electronic Theses and Dissertations, 2004-2019. 1251.