Hotels provide a lengthy menu of amenities based on the (largely accurate) perception that guests... more Hotels provide a lengthy menu of amenities based on the (largely accurate) perception that guests want those amenities and claim they will use them. While many guests do exactly that, a substantial percentage will "overpredict" which amenities they will use. This study of fifty hotel-wide and in-room amenities details both the overpredictions and, in some cases, underpredictions of amenity use by 724 guests in thirty-three hotels operated by six hotel brands-one upscale, two upper upscale, and three luxury-belonging to one hotel company. This study is intended to assist brand managers and hotel owners in determining which amenities make the most sense for their particular brand. Among the amenities that were highly overpredicted were an alarm clock, a spa, and in-room dining for dinner and late night. That is, a much larger percentage of guests expected to use these amenities than actually did so (although they still were used by some guests). Unexpected underpredictions included lobby seating, valet parking, and concierge service, for which the percentage of guests expecting to use the service was noticeably smaller than the percentage who did use them.
As marketing gains increasing prominence as an orientation that everyone in the organization shar... more As marketing gains increasing prominence as an orientation that everyone in the organization shares and as a process that all functions participate in deploying, a critical issue that arises is the role of the marketing function. Specifically, what role should the marketing function play, and what value does the marketing function have, if any, in an organization that has a strong market orientation? The authors take the view that though a firm's market orientation is undeniably important, the marketing function should play a key role in managing several important connections between the customer and critical firm elements, including connecting the customer to (1) the product, (2) service delivery, and (3) financial accountability. The authors collect data from managers across six business functions and two time periods with respect to marketing's role, market orientation, the value of the marketing function, and perceived firm performance. The results show that the marketing function contributes to perceptions of firm financial performance, customer relationship performance, and new product performance beyond that explained by a firm's market orientation. Marketing's value, in turn, is found to be a function of the degree to which it develops knowledge and skills in connecting the customer to the product and to financial accountability. For service firms, the value of the marketing function also is related positively to marketing's ability to connect the customer to service delivery.
Journal of the Academy of Marketing Science, Mar 1, 1997
This study examines how pricing decisions might be improved. We test the hypothesis that managers... more This study examines how pricing decisions might be improved. We test the hypothesis that managers have a tendency to overcompete by comparing the performance of managers with the performance of computerized strategies in a Prisoner's Dilemma pricing experiment. We find that the subjects in our study obtain lower profits than matched computer strategies. The subjects appear to value relative performance against competitors, even when they are explicitly instructed to maximize profits and are compensated based on profits. The implication for managers is that pricing to maximize profits may require tolerating the strong performance of competitors, even to the point of accepting a lower profit than some or all the competitors. If competitiveness means an adversarial, "zero-sum game" view of one's competitors, then the price of competitiveness in competitive markets such as those in our experiment may be lower profits. Being less competitive may be more profitable.
2006 IEEE International Conference on Service Operations and Logistics, and Informatics, Jun 1, 2006
Service is creating a paradigm shift in marketing. This presentation provides the underlying caus... more Service is creating a paradigm shift in marketing. This presentation provides the underlying causes of this paradigm shift and identifies the central role of technology. The implications of further technological development are explored and the consequences for the future of marketing are investigated.
The goals of this research are 1) to examine how service discrimination can emerge from algorithm... more The goals of this research are 1) to examine how service discrimination can emerge from algorithmic decision-making, 2) to investigate how service discrimination interacts with consumer word-of-mouth to affect demand and profits, and 3) to explore public policy and managerial implications of algorithmic discrimination in service outcomes. By employing a mixed-methods approach, the authors develop a theory demonstrating that discrimination can be profitable in the short-run, but can backfire in the long-run. An agent-based model shows the macro-level implications on demand and profits resulting from micro-level decisions based on biased algorithms. This research demonstrates that although there can be a short-term profit advantage from discrimination in service, non-discriminatory service providers can earn higher long-term profits, on average, than discriminatory service-providers when factoring in consumer word-of-mouth and competition. Large error in measuring consumer quality (value or profitability to the firm) exacerbates service discrimination, while large intra-group variation in consumer quality attenuates discrimination. This research emphasizes the long-term benefits of switching to a service policy that does not use group identity information in algorithmic decision-making, as well as incorporation of word-of-mouth considerations in the firm's objective function. However, for firms that must persist in using group identity information, this research recommends increasing investment in methods of measurement error reduction and increasing exposure to consumers of different populations. By doing so, a firm could reduce service discrimination while improving its long-term profits and societal well-being.
This paper reports on a new methodology to estimate the "cost of crime." It is adapted from the c... more This paper reports on a new methodology to estimate the "cost of crime." It is adapted from the contingent valuation method used in the environmental economics literature and is itself used to estimate the public's willingness to pay for crime control programs. In a nationally representative sample of 1,300 L1.
... Thus the statistic (23) t*_, = d/(Sd/\A) is always less than or equal to (in absolute value) ... more ... Thus the statistic (23) t*_, = d/(Sd/\A) is always less than or equal to (in absolute value) the t-statistic that would be obtained modeling the dependence of the d,'s. Thus t*_1 being beyond the tn-1 critical value ... Page 6. FLEXIBLE REGRESSION 15 ... and the conditional ...
The author wishes to thank Simmons Market Research Bureau, Inc., for providing the data used in t... more The author wishes to thank Simmons Market Research Bureau, Inc., for providing the data used in this study. and Jay E. Klompmaker, Joel C. Huber. and Robert S. Headen for many helpful comments and suggestions. .lournal of Busincsa Research 13. 483-494 (IYXS) 0 Elaevier Science Pubhshing Co.. Inc. IYXS
There are many situations in marketing in which several alternative quantitative models may be bu... more There are many situations in marketing in which several alternative quantitative models may be built to model a particular marketing phenomenon or system. Few methods exist for comparing the fit of such models if the models are not nested, especially if their performance on each of several criteria is important. This paper proposes a Bayesian cross-validated likelihood (BCVL) method for comparing quantitative models. It can be used when the models are either nested or nonnested, and is especially useful for nonnested models. A simulation based upon a typical marketing modeling situation shows the incremental benefit of using the BCVL method rather than existing techniques, and explores the circumstances under which BCVL works best. The applicability of the BCVL method is demonstrated using several typical marketing modeling situations.
A model for the prediction and explanation of individual television viewing choice is presented, ... more A model for the prediction and explanation of individual television viewing choice is presented, incorporating considerations of utility, audience flow, and audience segmentation. The proposed model provides a quantifiably explicit theoretical explanation of television viewing choice, and its validation on large-sample network viewing data provides a baseline degree of accuracy against which the performance of future television viewing models may be compared. Of direct relevance to advertising agencies and the television networks is the suitability of the model for estimating the comparative impact of alternative programs on the audience size and composition of competing programs in the immediate and subsequent time slots.
Hotels provide a lengthy menu of amenities based on the (largely accurate) perception that guests... more Hotels provide a lengthy menu of amenities based on the (largely accurate) perception that guests want those amenities and claim they will use them. While many guests do exactly that, a substantial percentage will "overpredict" which amenities they will use. This study of fifty hotel-wide and in-room amenities details both the overpredictions and, in some cases, underpredictions of amenity use by 724 guests in thirty-three hotels operated by six hotel brands-one upscale, two upper upscale, and three luxury-belonging to one hotel company. This study is intended to assist brand managers and hotel owners in determining which amenities make the most sense for their particular brand. Among the amenities that were highly overpredicted were an alarm clock, a spa, and in-room dining for dinner and late night. That is, a much larger percentage of guests expected to use these amenities than actually did so (although they still were used by some guests). Unexpected underpredictions included lobby seating, valet parking, and concierge service, for which the percentage of guests expecting to use the service was noticeably smaller than the percentage who did use them.
As marketing gains increasing prominence as an orientation that everyone in the organization shar... more As marketing gains increasing prominence as an orientation that everyone in the organization shares and as a process that all functions participate in deploying, a critical issue that arises is the role of the marketing function. Specifically, what role should the marketing function play, and what value does the marketing function have, if any, in an organization that has a strong market orientation? The authors take the view that though a firm's market orientation is undeniably important, the marketing function should play a key role in managing several important connections between the customer and critical firm elements, including connecting the customer to (1) the product, (2) service delivery, and (3) financial accountability. The authors collect data from managers across six business functions and two time periods with respect to marketing's role, market orientation, the value of the marketing function, and perceived firm performance. The results show that the marketing function contributes to perceptions of firm financial performance, customer relationship performance, and new product performance beyond that explained by a firm's market orientation. Marketing's value, in turn, is found to be a function of the degree to which it develops knowledge and skills in connecting the customer to the product and to financial accountability. For service firms, the value of the marketing function also is related positively to marketing's ability to connect the customer to service delivery.
Journal of the Academy of Marketing Science, Mar 1, 1997
This study examines how pricing decisions might be improved. We test the hypothesis that managers... more This study examines how pricing decisions might be improved. We test the hypothesis that managers have a tendency to overcompete by comparing the performance of managers with the performance of computerized strategies in a Prisoner's Dilemma pricing experiment. We find that the subjects in our study obtain lower profits than matched computer strategies. The subjects appear to value relative performance against competitors, even when they are explicitly instructed to maximize profits and are compensated based on profits. The implication for managers is that pricing to maximize profits may require tolerating the strong performance of competitors, even to the point of accepting a lower profit than some or all the competitors. If competitiveness means an adversarial, "zero-sum game" view of one's competitors, then the price of competitiveness in competitive markets such as those in our experiment may be lower profits. Being less competitive may be more profitable.
2006 IEEE International Conference on Service Operations and Logistics, and Informatics, Jun 1, 2006
Service is creating a paradigm shift in marketing. This presentation provides the underlying caus... more Service is creating a paradigm shift in marketing. This presentation provides the underlying causes of this paradigm shift and identifies the central role of technology. The implications of further technological development are explored and the consequences for the future of marketing are investigated.
The goals of this research are 1) to examine how service discrimination can emerge from algorithm... more The goals of this research are 1) to examine how service discrimination can emerge from algorithmic decision-making, 2) to investigate how service discrimination interacts with consumer word-of-mouth to affect demand and profits, and 3) to explore public policy and managerial implications of algorithmic discrimination in service outcomes. By employing a mixed-methods approach, the authors develop a theory demonstrating that discrimination can be profitable in the short-run, but can backfire in the long-run. An agent-based model shows the macro-level implications on demand and profits resulting from micro-level decisions based on biased algorithms. This research demonstrates that although there can be a short-term profit advantage from discrimination in service, non-discriminatory service providers can earn higher long-term profits, on average, than discriminatory service-providers when factoring in consumer word-of-mouth and competition. Large error in measuring consumer quality (value or profitability to the firm) exacerbates service discrimination, while large intra-group variation in consumer quality attenuates discrimination. This research emphasizes the long-term benefits of switching to a service policy that does not use group identity information in algorithmic decision-making, as well as incorporation of word-of-mouth considerations in the firm's objective function. However, for firms that must persist in using group identity information, this research recommends increasing investment in methods of measurement error reduction and increasing exposure to consumers of different populations. By doing so, a firm could reduce service discrimination while improving its long-term profits and societal well-being.
This paper reports on a new methodology to estimate the "cost of crime." It is adapted from the c... more This paper reports on a new methodology to estimate the "cost of crime." It is adapted from the contingent valuation method used in the environmental economics literature and is itself used to estimate the public's willingness to pay for crime control programs. In a nationally representative sample of 1,300 L1.
... Thus the statistic (23) t*_, = d/(Sd/\A) is always less than or equal to (in absolute value) ... more ... Thus the statistic (23) t*_, = d/(Sd/\A) is always less than or equal to (in absolute value) the t-statistic that would be obtained modeling the dependence of the d,'s. Thus t*_1 being beyond the tn-1 critical value ... Page 6. FLEXIBLE REGRESSION 15 ... and the conditional ...
The author wishes to thank Simmons Market Research Bureau, Inc., for providing the data used in t... more The author wishes to thank Simmons Market Research Bureau, Inc., for providing the data used in this study. and Jay E. Klompmaker, Joel C. Huber. and Robert S. Headen for many helpful comments and suggestions. .lournal of Busincsa Research 13. 483-494 (IYXS) 0 Elaevier Science Pubhshing Co.. Inc. IYXS
There are many situations in marketing in which several alternative quantitative models may be bu... more There are many situations in marketing in which several alternative quantitative models may be built to model a particular marketing phenomenon or system. Few methods exist for comparing the fit of such models if the models are not nested, especially if their performance on each of several criteria is important. This paper proposes a Bayesian cross-validated likelihood (BCVL) method for comparing quantitative models. It can be used when the models are either nested or nonnested, and is especially useful for nonnested models. A simulation based upon a typical marketing modeling situation shows the incremental benefit of using the BCVL method rather than existing techniques, and explores the circumstances under which BCVL works best. The applicability of the BCVL method is demonstrated using several typical marketing modeling situations.
A model for the prediction and explanation of individual television viewing choice is presented, ... more A model for the prediction and explanation of individual television viewing choice is presented, incorporating considerations of utility, audience flow, and audience segmentation. The proposed model provides a quantifiably explicit theoretical explanation of television viewing choice, and its validation on large-sample network viewing data provides a baseline degree of accuracy against which the performance of future television viewing models may be compared. Of direct relevance to advertising agencies and the television networks is the suitability of the model for estimating the comparative impact of alternative programs on the audience size and composition of competing programs in the immediate and subsequent time slots.
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Papers by Roland Rust