Two Marketing Essays: Evolution Of Attribute-Specific Preferences Through Consumer Learning And The Effect Of Gift Exchange On The Purchase Behavior

Min, Ji Hong. Ph.D., Purdue University, December 2013. Two Marketing Essays: Evolution of Attribute-Specific Preferences through Consumer Learning and the Effect of Gift Exchange on the Purchase Behavior. Major Professor: Subramanian Balachander. The first essay investigates the evolution of attribute-specific preferences through consumer learning. Most extant consumer learning models allow for learning about alternative-specific preferences such as brand preference in a brand choice model. However, there exist product categories which offer many varieties of products with different attributes. In such cases, it is important to model consumer learning of attributespecific preferences rather than simply modeling alternative-specific preferences in order to more accurately and parsimoniously describe consumer behavior. In this paper, we propose a structural model of consumer’s Bayesian learning of attribute-specific preference, using scanner panel data. We show that the proposed model and empirical results can enable marketing researchers to identify whether a certain attribute is characterized by significant consumer learning, and to capture the possible separate learning processes of preferences for multiple attributes. Moreover, the model results provide insights into the dynamics of preferences of different product attributes. We conduct policy evaluations of marketing strategies such as free sample promotions and the introduction of a new line extension and obtain interesting implications for managers. ix The second essay examines the effect of gift exchange on the purchase behavior. While the marketing manager’s interest in the gift behavior is increasing, there has been little empirical research on the gift exchange of consumers in the marketing literature. In this essay, we analyze the effect of gift exchange on the consumer’s purchase by analyzing a social network service dataset. More specifically, our proposed model operationalizes the item experience as a combination of accumulated purchase, gift giving and receiving experiences. The empirical findings include that the shapes of preference evolutions vary across different item experience variables, and that the gift receipts from individuals and those from corporations have quite different influences on the consumers’ preferences. For managerial implications, we suppose a situation that a marketer is searching for an optimal target strategy for cross-selling by sending item gifts to the target. Among various possible marketing decisions, targeting based on our empirical results show the best performance with the least input. As shown in this managerial application example, our proposed model enables marketers to optimize their marketing plans through the insights on the influence of gift exchange on the dynamic preferences.