Future Sales

Kevin Lewis

September 17, 2022

The Golden Age Is Behind Us: How the Status Quo Impacts the Evaluation of Technology
Adam Smiley & Matthew Fisher
Psychological Science, September 2022, Pages 1605-1614

New technology invariably provokes concerns over potential societal impacts. Even as risks often fail to materialize, the fear continues. The current research explored the psychological underpinnings of this pattern. Across four studies (N = 2,454 adults recruited via Amazon Mechanical Turk), we found evidence for the role of status quo thinking in evaluating technology. In Study 1, we experimentally manipulated the reported age of unfamiliar technology and found that people evaluate it more favorably when it is described as originating before (vs. after) their birth. In Studies 2 through 4, participants' age at the time of invention strongly predicts attitudes toward a wide range of real-world technologies. Finally, we found that individual differences in status-quo-based decision-making moderated evaluations of technology. These studies provide insight into how people respond to the rapidly changing technological landscape.

Does Company Size Shape Product Quality Inferences? Larger Companies Make Better High-Tech Products, but Smaller Companies Make Better Low-Tech Products
Kaitlin Woolley, Daniella Kupor & Peggy Liu
Journal of Marketing Research, forthcoming

Companies vary on oft-publicized size metrics (number of employees, revenue). Do consumers prefer otherwise-identical products made by larger or smaller companies? The answer hinges on whether consumers perceive the products as low-tech or high-tech. This prediction stems from a novel framework charting two lay theories regarding key resources companies utilize to provide value to consumers: employees and finances. In the "intrinsic motivation lay theory," consumers believe that employees of larger (vs. smaller) companies are less intrinsically motivated. In the "financial resources lay theory," consumers believe that larger (vs. smaller) companies have greater capacity to fund R&D. Critically, product type (low-tech vs. high-tech) differentially affects the accessibility of these two lay theories: For low-tech (vs. high-tech) products, the intrinsic motivation lay theory is more accessible, driving quality evaluations and choice in favor of smaller companies. For high-tech (vs. low-tech) products, the financial resources lay theory is more accessible, driving quality evaluations and choice in favor of larger companies. This research advances theory by reconciling conflicting findings regarding product quality inferences from company size metrics, with guidance for marketers to improve quality evaluations and choice shares by strategically supporting or challenging lay theories and shifting perceptions of company size or product type.

Finding Goldilocks Influencers: How Follower Count Drives Social Media Engagement
Simone Wies, Alexander Bleier & Alexander Edeling
Journal of Marketing, forthcoming

Influencers' follower count, or indegree, is a key criterion that advertisers use when devising influencer marketing campaigns. However, whether influencers with lower or higher follower count are more effective in generating engagement remains an open question. This multimethod research effort-involving an observational field data analysis, based on 802 Instagram marketing campaigns featuring more than 1,700 influencers, together with an eye-tracking study and laboratory experiments-establishes conclusive evidence of an inverted U-shaped relationship between influencers' follower count and engagement with sponsored content. A higher follower count implies broader reach but also cues a weaker relationship that reduces followers' engagement likelihood. That is, engagement increases, then decreases, as influencer follower count rises. The authors further test the potential moderating effects of two campaign properties: Campaign content customization and brand familiarity. Higher content customization and lower brand familiarity signal that influencers value their relationships with followers and thereby flatten the inverted U-shaped relationship. Managers can leverage these novel results and the related actionable guidelines to improve their influencer marketing strategies.

Does quality pay off? "Superstar" wines and the uncertain price premium across quality grades
Stefano Castriota et al.
Journal of Wine Economics, May 2022, Pages 141-158

We use data from Wine Spectator on 266,301 bottles from 12 countries sold in the United States to investigate the link between the score awarded by the guide and the price charged. The link between quality and price is positive, in line with the literature. In a deeper inspection, however, hedonic regressions show that the price premium attached to higher quality is significant only for "superstar" wines with more than 90 points (on a 50-100 scale), while prices of wines between 50 and 90 points are not statistically different from each other. Furthermore, an analysis performed through normal heteroskedastic and quantile regression models shows that the dispersion of quality-adjusted prices is described by an asymmetric U-shaped function of the score; that is, products with the lowest and highest quality have the highest residual standard deviation. Pursuing excellence is a risky strategy; the average price is significantly higher only for wines that achieve top scores, and the price premium becomes more volatile.

Streaming Stimulates the Live Concert Industry: Evidence from YouTube
Finn Christensen
International Journal of Industrial Organization, forthcoming

The removal of Warner Music content from YouTube in the first three quarters of 2009 constitutes a plausible natural experiment to investigate the impact of streaming on live concert sales. This Warner-YouTube blackout had statistically and economically negative effects on Warner artists relative to non-Warner artists. Specifically, relative revenues and prices were lower and relative attendance was not higher. These effects were stronger among artists who recently had a song in the Billboard Hot 100 and among those who were more frequently searched on YouTube just prior to the blackout. These findings suggest that the diffusion of streaming has stimulated the demand for live concerts. The evidence is also consistent with a differentiated Bertrand model of ticket pricing in which prices are strategic complements and prices and streaming penetration gives rise to increasing differences in the artist profit function. This suggests that concerts and streaming are complements in demand for a given artist, and that concerts by different artists are substitutes. More broadly, the paper is an example of how the results from the monotone comparative statics literature can be adapted for use with difference-in-differences estimation.


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