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Date of Award

Spring 5-15-2011

Author's School

Graduate School of Arts and Sciences

Author's Department

Business Administration

Additional Affiliations

Olin Business School

Degree Name

Doctor of Philosophy (PhD)

Degree Type

Dissertation

Abstract

Abstract

The dissertation studies the unique impact of two marketing activities on consumer demand and the implications for the firms' behaviors: advertising and star power.

In the first essay, I investigate how manufacturers' advertising competition, when advertising has a dynamic impact on the goodwill of brands, interacts with price competition in a manufacturer-retailer channel structure in the laundry detergent category. I find that advertising and price promotion are strategic complements as manufacturer advertising increases the price elasticity of demand. Advertising competition intensifies price competition although it improves the profitability of manufacturers. The presence of retailers in the channel leads to increased advertising spending but also mitigates the extent of price competition. Compared to the case of price competition only, the profitability of using retailers is much higher for manufacturers when they compete in both price and advertising. This implies that previous channel studies (e.g. McGuire and Staelin 1983) may have underestimated the benefits of manufacturers employing retailers to avoid direct competition. I also find that the benefits are asymmetric across manufacturers as brands with a high goodwill level and advertising effectiveness but no cost advantage appear to be most benefited.

The second essay examines the effect of star power on consumer demand in professional sports, the largest industry in entertainment business. In particular, I focus on the role of "stars" in driving attendance in major league baseball (MLB) by using rich game level and player level data. In particular, this study goes beyond the typical treatment of stars as brands that drive demand by examining the relative impact of different types of stars on different performance metrics. I found significant positive star power effect on game attendance. Interestingly, I found that star power of competitors can also increase home fans' attendance. Also, I found evidence that star power can help decrease the price sensitivity of consumers. Furthermore, I found that a star player increases game attendance differently across his position: e.g star pitchers are more effective to increase winning probability while star hitters are more effective to generate strong star power. In sum, the findings provide important insights that may help guide team's investment strategies and may inform leagues efforts to design effective revenue sharing mechanisms.

Language

English (en)

Chair and Committee

Panos Kouvelis

Committee Members

Lingxiu Dong, Fuqiang Zhang

Comments

Permanent URL: http:dx.doi.org/10.7936/K72J6928

Available for download on Friday, May 15, 2111

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Business Commons

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