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MARKETING PARTNERSHIPS: IMPACT OF MONITORING SCHEMES AND COOPERATIVE ADVERTISING AGREEMENTS
Title
MARKETING PARTNERSHIPS: IMPACT OF MONITORING SCHEMES AND COOPERATIVE ADVERTISING AGREEMENTS.
Creator
Chennamaneni, Pavan, Desiraju, Ramarao, University of Central Florida
Abstract / Description
Marketing partnerships may involve either horizontal relationships (e.g., a co-marketing alliance between firms selling different products) or vertical relationships (e.g., between an upstream manufacturer and its downstream retailers). Either type of partnership often includes multiple members and the marketing efforts (e.g., level of advertising) of any member typically affect the profitability of the other members. When selecting their effort levels, however, the individual members of the...
Show moreMarketing partnerships may involve either horizontal relationships (e.g., a co-marketing alliance between firms selling different products) or vertical relationships (e.g., between an upstream manufacturer and its downstream retailers). Either type of partnership often includes multiple members and the marketing efforts (e.g., level of advertising) of any member typically affect the profitability of the other members. When selecting their effort levels, however, the individual members of the partnership do not account for such externalities. Consequently, the overall effort on behalf of the partnership is not optimal. This dissertation investigates the value of contractual mechanisms such as monitoring schemes (for horizontal partnerships) and cooperative advertising programs (for vertical partnerships) that may provide better incentives to the partners to invest into the relationship. The first part of this dissertation focuses on horizontal marketing partnerships and examines the relative effectiveness of outcome- and action-based contracts in providing the alliance partners with the incentives to invest appropriately. A mathematical model is developed in which a focal firm (e.g., Sony) contracts with two partners (e.g., McDonald's and Old Navy), when each of these partners is privately informed about the impact of the alliance on its demand. The analysis evaluates the strengths and weaknesses of outcome- (or output-) and action- (or input-) based contracts in several settings including those with no demand externality, a positive externality and a negative externality. The analysis shows that when there is (a) no externality, (b) negative externality, or (c) a relatively weak positive externality, there is a strict preference for output-based contracts; that preference, however, is reversed with a sufficiently strong positive externality. The rationale for these findings, along with the implications and directions for further work are discussed. The second part of this dissertation focuses on a vertical marketing relationship where multiple retailers sell the products from a common manufacturer. Here, each retailer's level of advertising affects the demand for the other retailers. This positive externality, however, allows any retailer to free-ride on the other retailers' efforts and leads to an overall reduction in the level of advertising by all the retailers. In this context, a manufacturer can use a cooperative advertising contract to reimburse part of the advertising expenses of its retailers in order to induce them to raise their levels of advertising. Observed terms in a cooperative advertising contract include either a participation rate, a participation rate and a variable accrual rate, or a participation rate and a fixed accrual rate. This dissertation analyzes the relative effectiveness of the above three types of cooperative advertising contracts in minimizing or eliminating the free-riding problem. More specifically, a mathematical model is developed to analyze the relative impact of these contractual terms when the downstream retailers face either symmetric or asymmetric demand and cost structures. The analysis shows that with symmetric retailers, the three types of contracts are equally effective. With asymmetric retailers, though, including some form of accrual stipulations typically adds value to a contract that specifies only a participation rate. Further, using a variable accrual stipulation may be preferred to the fixed accrual stipulation under certain conditions and vice versa. The two types of accrual stipulations affect retail prices and efforts in distinct ways and these differences may tip the scale in favor of one contract versus the other under the appropriate circumstances. These conditions and the intuition behind the results are discussed. Overall, this dissertation contributes to the literature on horizontal and vertical marketing relationships and enhances our understanding of distinct contractual mechanisms that can help align the actions of various members involved in such partnerships.
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Date Issued
2009
Identifier
CFE0002770, ucf:48122
Format
Document (PDF)
PURL
http://purl.flvc.org/ucf/fd/CFE0002770
Infectious Disease Risks in Developing Countries: A Non-Market Valuation Exercise
Title
Infectious Disease Risks in Developing Countries: A Non-Market Valuation Exercise.
Creator
Samajpati, Shreejata, Gerking, Shelby, Dickie, Mark, Caputo, Michael, Roy, Joyashree, University of Central Florida
Abstract / Description
This dissertation focuses on the non-market valuation of health-risks of malaria, an infectious disease that imposes a substantive public health burden across the globe, hitting particularly hard the tropical developing nations of Africa and Asia. The United Nations Millennium Development Goals include malaria control as a priority and large investments are underway to promote effective prevention and treatment. Despite such concerted supply-side efforts, malaria-related mortality and...
Show moreThis dissertation focuses on the non-market valuation of health-risks of malaria, an infectious disease that imposes a substantive public health burden across the globe, hitting particularly hard the tropical developing nations of Africa and Asia. The United Nations Millennium Development Goals include malaria control as a priority and large investments are underway to promote effective prevention and treatment. Despite such concerted supply-side efforts, malaria-related mortality and morbidity still abound due to a complex interface of factors like climate-change, poverty, inadequate control behavior, infection and prevention externalities, parasite resistance etc. This research project digs into the demand-side of the health problem, considers the "externality" dimension to prevention, and primarily asks the question: how do individuals in developing countries view competing disease-control (prevention) measures, viz. a publicly-administered community-level malaria control measure as against private preventive choices. A theoretical model is developed to help explore the public-private interplay of health risks of malaria. The malaria-endemic regions of Kolkata (India) and its rural fringes comprise the site for an empirical investigation. A field survey (Malaria Risk and Prevention Survey, October-December, 2011) incorporating a mix of stated and revealed preference techniques of health valuation is implemented. Risk-perceptions of respondents are elicited using a measurable visual-aid and individuals' perceived valuations of health-risk reductions, randomly offered with the public and private health treatments, are empirically ascertained. Using a Likelihood Ratio Test on the structural risk parameters, it is seen that individuals' valuations of health risk reductions are the same across the private and public treatments. The comparative valuation exercise, thus, corroborates the externality dimension to malaria control, calling for greater public action to combat malaria. The viability of such a scaled-up public malaria program, in the context of Kolkata, is discussed by comparing the public treatment willingness to pay estimates with the annual estimated costs that the Kolkata Municipal Corporation, the civic body in the city of Kolkata, maintains on account of vector control. Results from the comparative valuation exercises also support the idea that private prevention is generally responsive to prevention costs, indicating the importance of price incentives to induce greater prevention. The issues of health valuation and price sensitivity are further explored across various split-samples differentiated on the basis of socio-economic attributes, disease exposure, actual prevention efforts and perceived malaria risks of survey respondents. Such auxiliary exercises help analyze the valuation question in greater depth, and generate policy insights into the potential factors that shape private prevention behavior.
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Date Issued
2012
Identifier
CFE0004594, ucf:49195
Format
Document (PDF)
PURL
http://purl.flvc.org/ucf/fd/CFE0004594