Mark Vandenbosch

• Nastasoiu, A.; Vandenbosch, M. B., 2019, "Competing with loyalty: How to design successful customer loyalty reward programs", Business Horizons, March 62(2): 207 - 214.
  Abstract: For industries with low switching costs, customer loyalty programs (LPs) have potential to drive differentiation and sustain a competitive advantage. However, incentives provided through LPs also have a potential to escalate into costly price wars. In this article, we discuss how to design successful customer loyalty reward programs that bring value to participants and that cannot be emulated by competitors easily. We focus on three distinct aspects of improvement: personalization, reward types, and additional services. Through personalization, companies can leverage the knowledge they already have on their customers to tailor offers that they find relevant and appealing. For the reward structure, we argue in favor of a certain degree of opacity. We also encourage loyalty programs to consider giveaways that are unique and difficult to imitate and to use all the information they have available to provide rewards that fit with each customers’ idiosyncratic situation or preference. Finally, competitive LPs should look beyond offers and rewards. In addition to purchases, LPs can reward participants for other desirable behaviors; they can also provide additional services that impose minimal costs on firms, but bring value to customers.

  Link(s) to publication:

  http://dx.doi.org/10.1016/j.bushor.2018.11.002

• Nastasoiu, M-A.; Bendle, N. T.; Vandenbosch, M. B., 2019, "Improving Measurement With Big Data: Variety-Seeking And Survival", Applied Marketing Analytics, January 4(3): 253 - 263.
  Abstract: Big Data can be used to make sense of highly unstructured consumer data, and improve both the reliability and validity of measures that have historically required manual coding. Furthermore, using available secondary data allows for much faster coding. This research proposes a new and more robust way to measure the degree of variety-seeking exhibited by consumers. It employs the Million Song Dataset, a database of consumergenerated tags describing musical styles, to create measures of musical variety with minimal manual coding. Using a sample of 10,511 SiriusXM subscribers, the research compares this novel method of measuring variety-seeking behaviours with a more simple model, and finds that the novel method is a more accurate predictor of churn.

  Link(s) to publication:

  https://www.ingentaconnect.com/content/hsp/ama/2019/00000004/00000003/art00008

• Malthouse, E. C.; Calder, B. J.; Kim, S. J.; Vandenbosch, M. B., 2016, "Evidence that user-generated content that produces engagement increases purchase behaviours", Journal of Marketing Management, October 32(5-6): 427 - 444.
  Abstract: The use of social media environments that enable consumers to engage with a brand publicly is of increasing interest to marketers. In particular, contests in which consumers create user-generated content (UGC) offer the potential of actively engaging consumers with a brand and thereby directly affecting consumer purchases. This research demonstrates that prompting consumers to create UGC that engages consumers in actively thinking about or elaborating on a personal goal that is relevant to a brand does affect actual buying decisions. It shows that the impact of this engagement via content elaboration is not accounted for by mere participation in the social media activity or rewards offered to participants. The research adds to the growing literature on the importance of consumer engagement and validates the link between engagement and actual purchase behaviours.

  Link(s) to publication:

  http://dx.doi.org/10.1080/0267257X.2016.1148066

• Bendle, N. T.; Vandenbosch, M. B., 2014, "Competitor Orientation and the Evolution of Business Markets", Marketing Science, November 33(6): 781 - 795.
  Abstract: Competitor orientation, the focus on beating the competition rather than maximizing profits, seems to thrive in business situations despite being, by definition, sub-optimal for profit-maximizing firms. Our research explains how a competitor orientation can persist and even thrive in equilibrium in markets that reward only profits. We apply evolutionary game theory to business markets where reputation matters. We use three games that represent classic interactions in business marketingChicken (to illustrate competition for product adoption), the Battle of the Sexes (channel negotiations), and the Prisoners’ Dilemma (pricing battles). Initial populations are assumed to contain both profit-maximizing managers and competitor-oriented managers (i.e., those who gain additional utility from beating others). We demonstrate that a competitor orientation can survive in equilibrium despite selection that is based solely on profits. Using Chicken, we show that a competitor orientation thrives and can even overrun the population. We use the Battle of the Sexes to show that a competitor orientation will overrun one population in a two-sided negotiation (e.g., all retailers in a retailermanufacturer dyad). Lastly, using the Prisoners’ Dilemma, we show competitor orientation is not selected against. We conclude that evolutionary profit-driven selection pressures cannot be assumed to eliminate nonprofit-maximizing behaviour even when selection is based purely on profitability.

  Link(s) to publication:

  http://dx.doi.org/10.1287/mksc.2014.0863

• Mark, T.; Lemon, K.; Vandenbosch, M. B., 2014, "Customer Migration Patterns: Evidence form a North American Retailer", Journal of Marketing Theory and Practice, June 22(3): 251 - 270.
  Abstract: In this study, we assess how marketing activities influence the extent to which customers become more (or less) profitable to a company over time. Using data collected from an apparel and household goods multichannel retailer over a three-year period beginning in 2001, we apply a Hidden Markov Model to a longitudinal data set from a cohort of 4,165 customers over a three-year period. We find three segments: inactive, occasional, and loyal. We find 23 unique migration patterns among these segments. Price promotions have a positive effect on increasing migration patterns, but were not significant for stable patterns. Catalogs have a negative impact on stable migration patterns and were not significant for increasing migration patterns. Finally, we find coupons have a negative impact on both stable and increasing migration patterns.

  Link(s) to publication:

  http://dx.doi.org/10.2753/MTP1069-6679220302

• Mark, T.; Lemon, K.; Vandenbosch, M. B.; Bulla, J.; Maruotti, A., 2013, "Capturing the Evolution of CustomerFirm Relationships: How Customers Become More (or Less) Valuable Over Time", Journal of Retailing, October 89(3): 231 - 245.
  Abstract: Few studies have examined the influence of marketing activities while accounting for customer dynamics over time. The authors contribute to this growing literature by extending the hurdle model to capture customer dynamics using a hidden Markov chain. We find our dynamic model performs better than static and latent class models. Our results suggest the customer base can be segmented into four segments: Deal-prone, Dependable, Active, and Event-driven. Each segment reacts differentially to marketing activities. Although catalogs influence both purchase incidence and the number of orders, this marketing activity has the largest impact on purchase incidence across all four segments. In contrast, retail promotions are more likely to influence the number of orders a customer will make for all of the segments except for the Deal-prone segment. For this segment, retail promotions have the strongest impact on purchase incidence.

  Link(s) to publication:

  http://dx.doi.org/10.1016/j.jretai.2013.04.001

• Dolansky, E.; Vandenbosch, M. B., 2013, "Price Sequences, Perceived Variability and Choice", Journal of Product and Brand Management, July 22(4): 314 - 321.
  Abstract: Purpose Sequences of prices are becoming more commonplace but there is limited research on their behavioral effects. The purpose of this paper is to determine if a sequence of past prices, and particularly its variance, has a strong effect on choice. Will people pay significantly more for a seller who has a more predictable history of past prices? Designmethodologyapproach Past theory is drawn upon to create predictions regarding how individuals will perceive and value past sequences of prices. One experimental study is conducted to test preference and choice based on past price sequences. Findings Individuals more frequently choose a vendor with past prices that fall into a predictable pattern, even when doing so results in higher future prices to be paid. Originalityvalue This paper not only tests notions that have anecdotal support (e.g. preference for fixed vs floating interest rates, despite the higher cost of doing so), but also demonstrates that a person's distaste for perceived variability is sufficiently strong so as to result in a willingness to pay 40 percent more for this predictability.

  Link(s) to publication:

  http://dx.doi.org/10.1108/JPBM-11-2012-0211

• Dolansky, E.; Vandenbosch, M. B., 2012, "Perceived Variance and Preference for Sequences of Outcomes", Journal of Product and Brand Management, July 21(4): 285 - 292.
  Abstract: Purpose The purpose of this paper is to propose a new explanation for the well-documented preference among individuals for sequences of increasing utility. It is put forward here that while there may be a preference for ascending-utility sequences, this relationship is mediated by perceptions of variance. Specifically, there is reason to believe that sequences of ascending utility (e.g. receipt of payments) are perceived to be less variable than sequences of descending utility (e.g. prices). Designmethodologyapproach Past and present price research supports the idea that perceived variance plays a key role in preference, which fits with established theory. This theory is examined and applied to a hypothetical scenario involving sequences of uncertain outcomes. The predicted effect is tested in two experimental studies. Findings The two studies lend support to the proposed explanation of sequence preference. Study one demonstrates that the effect of sequence direction on preference is mediated by perceptions of variability, and that individuals perceive a sequence of ascending utility to be less variable than an equivalent descending sequence. Study two shows that individuals prefer a sequence when it represents wages (ascending utility) than when it does prices (descending utility). Originalityvalue The paper provides a sound theoretical framework, as well as supporting evidence, for how sequences of outcomes, such as prices, are perceived by consumers. Given that such sequences are increasingly available thanks to information technology, and the increased use of yield management systems (leading to more price fluctuation), how they affect decisions is of obvious importance.

  Link(s) to publication:

  http://dx.doi.org/10.1108/10610421211246711

• Vandenbosch, M. B.; Sapp, S., 2010, "Opportunism knocks", MIT Sloan Management Review, September 52(1): 17 - 19.
  Abstract: The relentless drive for efficiency over the past two decades has resulted in complex supply chains in which participants are increasingly disassociated from the final customer transaction. Complex supply chains, with a multiplicity of agents, are more prone to problems, and on occasion, to spectacular collapse. We study several market failures ranging from the failure of Peanut Corporation of America to the subprime mortgage crisis. Although these crises appear to be very different and were certainly shaped by their unique circumstances, we propose that a primary cause was essentially the same: the failure of the market mechanism to root out opportunism within the different levels of the market or supply system. What’s more, the conditions present in our sample of failures are identical to those present in a wide spectrum of today’s supply chains. We explain why opportunism flourishes in today’s complex and interconnected environments and provide a checklist for managers seeking to better protect themselves from opportunism risks.
• Fisher, R. J.; Vandenbosch, M. B.; Antia, K. D., 2008, "An Empathy-Helping Perspective on Consumers' Responses to Fund-Raising Appeals", Journal of Consumer Research, October 35(3): 519 - 531.
  Abstract: The research examines viewers' actual responses to four televised fund-raising drives by a public television station over a 2-year period. The 584 pledge breaks we studied contain 4,868 individual appeals that were decomposed into two underlying dimensions based on the empathy-helping hypothesis: the appeal beneficiary (self versus other) and emotional valence (positive versus negative). We find that the most effective fund-raising appeals communicate the benefits to others rather than to the self and evoke negative rather than positive emotions. Appeals that emphasize benefits to the self significantly reduce the number of calls to the station, particularly when they have a positive emotional valence.
• Barclay, D. W.; Deutscher, T. H.; Vandenbosch, M. B., 2007, "Business Marketing in Master's Programs: A Part of the Fabric", Journal of Business-to-Business Marketing, January 14(1): 31 - 52.
  Abstract: In response to the challenge issued by Narus and Anderson (1998) to rethink the role of business marketing in an MBA curriculum, we propose the rationale, methodology, and philosophy for integrating business marketing into the fabric of a graduate business program. There are many reasons for business marketing knowledge being important to MBA graduates, not the least of which is that the majority of them will work in firms whose primary customers are other organizations. In this article we demonstrate theoretical and marketplace rationale for repositioning business marketing in the MBA curriculum. We propose a template to guide the process including key business market and business marketing concepts that we believe should be part of the fabric. Finally, we detail the experiences of one school's journey in moving in this direction.
• Dawar, N.; Vandenbosch, M. B., 2004, "The seller's hidden advantage", MIT Sloan Management Review, December 45(2): 83 - 88.
  Abstract: Sellers, unlike their customers, can see the forest for the trees in an industry. Drawing on examples from Hilti, Algorithmics, McCain Foods and others, the authors describe three strategies for putting that unique view to use and discuss how these strategies can be implemented.
• Vandenbosch, M. B.; Clift, T. B., 2002, "Dramatically Reducing Cycle-Times Through Flash Development", Long Range Planning, December 35(6): 567 - 589.
  Abstract: For companies working in high-tech industries, the rate at which new products can come to market is the key to success and survival. This paper examines the traditional strategies to speed up the cycle times of new product development and proposes its own approach. The authors advocate an approach that they call flash development' whereby the outcome is defined right from the start of the process and all energies are focused on reaching that outcome as soon as possible.
• Vandenbosch, M. B.; Dawar, N., 2002, "Beyond better products: Capturing value in customer interactions", MIT Sloan Management Review, June 43(4): 35 - 42.
  Abstract: Why do customers choose to buy from a company rather than its competition? More than 1,500 senior executives were asked that question in interviews and group discussions. The executives agreed almost universally that offering great products, technologies or services is merely the entry stake into the competitive arena. Most spoke of the need to maintain an edge in the way their companies interact with customers. As the main drivers of customer choice, the executives cited cost-oriented factors. Strategies built around reducing customers' interaction costs and risk are strategies that offer a systematic way to tap into new sources of customer value while avoiding the often futile attempt to compete on product innovation. The study illustrates five different strategies that some companies are using to build a sustainable advantage through their approach to customers.

  Link(s) to publication:

  http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000177137400010&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=67228c68cb99b659eed57e1f0eeb797f

• Plouffe, C. R.; Vandenbosch, M. B.; Hulland, J. S., 2001, "Intermediating Technologies and Multi-Group Adoption: A Comparison of Consumer and Merchant Adoption Intentions Toward a New Electronic Payment System", Journal of Product Innovation Management, January 18(2): 65 - 81.
  Abstract: Traditional technology adoption research has assumed a single adopting group. However, there are many settings in which multiple groups must jointly adopt an innovation in order for it to succeed. This is particularly true for new information technology innovations that mediate the relationship between two groups. For example, online exchanges must attract both suppliers and buyers in order to be successful. The same is true for providers of hardwaresoftware solutions for electronic data interchange and supply change management.

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