Marketing in Mobile, Omni-Channel and Multi-Format Contexts

Abstract

This dissertation studies the marketing issues in mobile, omni-channel and multiformat contexts. In the first essay, while conventional wisdom indicates that apps have a positive impact on customer spending, I critically examine this premise by estimating the impact of app adoption on customers’ omni-channel spending in the context of a hotel chain and identifying the factors contributing to such impact. Exploiting the variation in customers’ timing of app adoption and difference-in-differences approach, I find that app adoption has a significant negative impact on total customer spending. This negative effect is robust to controlling for customer self-selection bias, measuring effects across alternative time frames, customer spending patterns and app usage behaviors, using different measures of purchase and alternative model specifications, and using different random samples. A survey of app adopters reveals that customers who adopt the focal app are also most likely to adopt competitors’ apps, and therefore are likely to search more and shop around, leading to decreased share of wallet with the firm. My analysis also reveals that the negative impact on spending is lower for those customers who use the apps for mobile check-in than those who use the apps for just searching. So by encouraging customers to engage with the full functionality of the app, firms can possibly mitigate the negative impact. In the second essay, I further develop an integrated dynamic structural model to investigate consumers’ decision to adopt the mobile app, and its subsequent impacts on their decisions to purchase using alternative shopping channels. The policy simulations show that consumers are less likely to make reservations with the focal firm if the firm had not introduced their apps. Finally, in the third essay, I investigate the strategy of extending the product line by providing an additional premium version as a means to spur demand for the existing premium version. I highlight how extending the results of the standard product line model is insufficient in such cases due to the conceptual nuances that the presence of the free version introduces in a freemium context. I conduct a randomized field experiment with an online content provider, the National Academies Press, which offers book titles in a PDF version for free and sells the paperback version for a premium. Overall, I show that paperback titles accompanied by an additional premium version, either an ebook or a hardcover format, have higher sales than those in the control condition. The positive impact on paperback sales is stronger for titles that are more popular or lower in price, and the effect of introducing the ebook version is higher when the ebook price is closer to the paperback price. By analyzing customer choices at the individual level, I identify the existence of the compromise effect and the attraction effect in the extended product line setting, a significant contribution not only in the freemium context but also to the product line literature.