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On the Simple Economics of Advertising, Marketing, and Product Design Author info | Abstract | Publisher info | Download info | Related research | Statistics Justin P. Johnson
David P. Myatt
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We propose a framework for analyzing transformations of demand. Such transformations frequently stem from changes in the dispersion of consumers' valuations, which lead to rotations of the demand curve. In many settings, profits are a U-shaped function of dispersion. High dispersion is complemented by niche production, and low dispersion is complemented by mass-market supply. We investigate numerous applications, including product design; advertising, marketing and sales advice; and the construction of quality-differentiated product lines. We also suggest a new taxonomy of advertising, distinguishing between hype, which shifts demand, and real information, which rotates demand. (JEL D8, L1, M3).
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Article provided by American Economic Association in its journal American Economic Review .
Volume (Year): 96 (2006)
Issue (Month): 3 (June)
Pages: 756-784
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Handle: RePEc:aea:aecrev:v:96:y:2006:i:3:p:756-784Contact details of provider: Email: Web page: http://www.aeaweb.org/aer/ More information through EDIRC
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Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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Heski Bar-Isaac & Guillermo Caruana & Vicente Cunat, 2008.
"Information Gathering and Marketing ,"
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