Essays in Strategic Marketing
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Essay 1 focuses on purchasing behavior in the video game market, which can be conceptualized as a two-stage process where users first purchase a console and then purchase content for that console. Prior research on platform-mediated markets, which are defined by this interdependence in platform and content sales, has highlighted the relationship between installed base size (i.e. the total number of console adopters) and content sales. We extend this research by examining how two characteristics of installed bases, unrelated to size, affect content sales. First, we investigate the effect of installed base innovativeness, defined as the proportion of total adopters from early in the platform product's lifecycle, on content sales. Next, we evaluate the effect of installed base recency, defined as the proportion of total adopters that recently adopted the platform product. We find that more innovative or recently adopted installed bases purchase more content on a per user basis. These results suggest that content sales depend on more than just installed base size, providing an opportunity to increase content sales through the identification of installed bases high in either innovativeness or recency. In Essay 2, we examine how media exposures from sponsorship can impact a firm's financial performance. The extant literature has typically used aggregate expenditures as a proxy to study the financial effect of paid marketing communications. However, prior research has demonstrated that expenditures might not be an appropriate proxy for the overall effect of these marketing communications. We, therefore, study how exposures impact firm financial performance independently of firm expenditures used to obtain those exposures. Using a unique context (stadium naming rights agreements), in which the firm receives a random number of exposures, and leveraging the temporal nature of paid promotion in this context, we separately identify the effects of exposures from expenditures. In three analyses, we find that exposures increase firm stock returns and lower firm systematic risk, while promotional expenditures decrease firm stock returns and raise firm systematic risk. These results begin to bridge the gap in how promotional communications are measured between the marketing/finance interface literature and the broader literature on marketing effectiveness.