Two marketing essays: Gift giving behavior and stock market response to advertising investments
Abstract
The first essay examines gift giving behavior in online gift registry context. Gift purchases differ from regular purchases because they reflect social activity as well as monetary exchanges. This research analyzes online wedding registry data from seven retailers to investigate gift registry fulfillment outcomes and finds that both reference price and assortment size influence gift fulfillment. The relative value of a gift, compared with the average value of all gifts in the same registry, plays an important role in the fulfillment outcomes. Specifically, a positive fulfillment effect arises for both monetary and social benefits, such that in gift giving, both monetary and social benefits, up to a certain level, have significant positive effects on gift fulfillment probability. Furthermore, the analysis points to two different types of gift givers: those who seek social benefits by purchasing relatively expensive gifts and those who seek monetary benefits by giving an affordable gift. The impact of assortment size on fulfillment rates indicates an inverted U-shaped relationship, reflecting an initial increase created by providing greater variety for gift givers and a decline that can result from many close substitutes and consumer confusion. These empirical results may help retailers strengthen their gift registry business. The second essay examines the impact of advertising spending on future-period stock returns across various industries from 1980 to 2008. Under the efficient market hypothesis, the stock price should incorporate the value of a firms advertising along with other tangible and intangible assets. If so, advertising spending would not be associated with future excess stock returns. Nevertheless, we find that relative advertising spending, measured by the level and change within an industry, is associated with positive future stock returns. These risk-adjusted abnormal returns indicate that investors slowly react to the intangible value generated from advertising spending. Abnormal annual returns are more pronounced in small firms, which are less known to investors. Also, firms which maintain intensive advertising after having below average stock market returns have the largest abnormal annual returns. This indicates that investors can be overly pessimistic about advertising spending when the firms recent stock price performance has been disappointing. Finally, there is no evidence that stock prices are becoming more efficient over time. This is because the abnormal returns are as strong from 2000 to 2008 as in earlier decades.
Degree
Ph.D.
Advisors
Robinson, Purdue University.
Subject Area
Marketing
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