Journal of Interactive Marketing

A fundamental distinction between goods and services is that in the retailing of goods and some services the costs of production and distribution are clearly separable in a non-arbitrary fashion, usually identified as costs of goods sold. They have type I separability. Distribution services, which are also known as attributes, marketing mix or output variables, are produced, distributed and consumed just as goods or physical products or core services sold directly to consumers at an explicit price. When online settings generate separability of production distribution and consumption of all these distribution services in space and time we have strong type II separability, which has not been identified in the literature. The latter plays an essential role in the emergence, sustainability and sometimes dominance of online channels. It has profound implications for both the demand side and the supply side of firms in online channels.

We develop implications of this result with respect to potential maximum levels of these services in electronic channels and for a broad range of other important topics relevant for marketing and economics.

Brands often seek endorsements by consumers on social media (e.g., likes on Facebook). But is this marketing strategy feasible for all brands? To answer this question, this research investigates in seven studies the processes that underlie consumers’ intention to endorse brands on social media. We suggest that consumers aim to signal their identity by endorsing brands online. Based on the Brands as Intentional Agents Framework and related research in (social) cognition and consumer behavior, we argue that consumers on social media primarily want to emphasize their warmth rather than their competence. Experimental studies 1, 2, and 3 distinguish between nonprofit and for-profit brands and show that brand warmth (and not competence) mediates the effect of brand type (nonprofit vs. for-profit) on consumers’ intentions to endorse brands and branded content on social media. Experiment 4 demonstrates that this process is moderated by brand symbolism (moderated mediation). A high level of brand symbolism increases the positive effect of warmth on consumers’ intention to endorse brands online, but only for for-profit brands. The fifth experiment shows that these effects are conditional upon the public vs. private distinction in consumer behavior: consumers prefer to publicly affiliate with nonprofit (vs. for-profit) brands but with regard to private affiliations, there is no difference between both types of brands. In experiment 6, the causal role of warmth (vs. competence) is further examined. Finally, we demonstrate that perceptions of brands’ warmth and not competence reduce the efforts that brands need to make to achieve consumers’ endorsements on their real brand pages on Facebook.

Numerous studies have investigated the impact of review volume and review variance on product price, but their findings are mixed. The perspective of mismatch cost framework (e.g., Sun 2012) argues that, at the market level, the impact of review variance on product price varies with review valence due to diverse product tastes across individuals. The perspective of classic expected utility framework (e.g., Wu and Ayala Gaytán 2013; Wu et al. 2013) further argues that heterogeneous risk attitudes across individuals directly drives the varying impact of both review volume and variance on willingness-to-pay, regardless of review valence. Although both frameworks have gained good empirical support, neither of them probed whether the impact of review volume or review variance varies within an individual.

We extend the current research by focusing on the varying impact of review volume on consumers’ willingness-to-pay. Combining economic and behavioral theories of decisions under uncertainty, we argue that consumers’ preferences of uncertainty can vary both across and within individuals. The extended framework thus concludes that the impact of review volume on consumers’ willingness-to-pay not only varies across individuals with different types of uncertainty preferences, but may also change with review valence within an individual of some types of uncertainty preferences. The framework is tested using an experimental study and an empirical study. Results from both studies provide good support for this broader framework.

Shortly after Groupon started its business in 2008, selling one deal a day with substantial price discounts, daily-deal sites became new online shopping places for many people. Starting with Groupon, most daily-deal sites required that voucher sales be higher than a predetermined number before deals become active. This feature, known as the “tipping point,” was a unique characteristic of the daily-deal business and is identified as one of the most prominent features of social shopping. Most daily-deal sites also required that a redemption period start after a deal was over and be fixed, usually 90 days, presumably to maximize the promotional effect of deals by encouraging rapid voucher redemption. The question remains, however, whether such features actually contributed to the success of the daily-deal industry. Using individual-level panel data from a major daily-deal site in Korea, we analyze whether consumers’ purchase and redemption behaviors were affected by these features and how consumers changed their behaviors as they continued to purchase and redeem vouchers over time. We find that the presence of the tipping point did not boost voucher sales and likely deterred new customers from buying deals right away. We also find that new customers tended to redeem their vouchers quickly, and this likely caused the small businesses that offered deals to become overwhelmed. It is not surprising, given our findings, that both Groupon and the Korean daily deal site abandoned the use of the tipping point and modified redemption rules.