Marketing managers are constantly presented with the challenge of devising a successful launch strategy for new products. Among the most critical new product release decisions are those regarding advertising and release timing. This dissertation consists of two essays that propose a set of econometric models and estimation techniques to address these two issues.
A major barrier to setting the optimal advertising budget for a new product is the lack of precise estimates of consumers' response to advertising after launch. The first essay introduces a method to forecast advertising responsiveness by pooling information from previous product releases with similar characteristics and applies it to the U.S. DVD market. Methodologically, the paper also solves the slope endogeneity problem that arises from firms' private information about the heterogeneous effects of advertising on demand. The empirical analysis demonstrates that the estimates of advertising elasticities would be substantially biased if slope endogeneity were ignored. It also sheds light on the moderators of advertising effectiveness (such as word-of-mouth and product features) and yields findings of substantial interest to researchers and managers involved in entertainment marketing.
The second essay addresses the new product release timing problem. Marketers in many industries routinely use timing as a segmentation device through sequential product releases. However, there has been little empirical research addressing the optimal inter-release time issue. This essay proposes an econometric framework to empirically solve this problem by first developing and estimating a dynamic model of forward-looking consumers' choice for sequentially released products and then using the structural estimates to solve for the optimal inter-release time. The empirical application focuses on the optimal time between a theatrical movie and its DVD version—a topic of great managerial relevance to Hollywood studios.
|School Location:||United States -- Connecticut|
|Source:||DAI-A 68/12, Dissertation Abstracts International|
|Keywords:||Advertising, Entertainment marketing, Motion picture industry, New product, Release timing, Sequential introduction, Word of mouth, Word-of-mouth|
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