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Academic lecture: Fit-revelation Sampling and Advertising: Complementary or Substitutionary?
2015-12-23
Time: 10:15-11:30, Dec. 23, 2015
Venue: Room 335, School of Economics & Management
Speaker: Rachel Chen, University of California at Davis
Abstract:
Buyers are often uncertain about how product fits with their individual preferences. In such situations, firms can provide product samples or free trials that allow customers to reveal their fit before purchase. It is not uncommon to observe  fit-revelation sampling to be jointly offered with different types of advertising. While advertising can alter consumers' tastes and create spurious product differentiation and brand loyalty, sampling allows consumers to experience the product, and thus, bring consumers back to the reality.  This paper studies the profit implication of the interactions between fit-revelation sampling and advertising. In particular, we examine whether these two strategies are complementary or substitutionary. We also characterize conditions under which it is optimal to do sampling alone, advertising alone, or a simultaneous offering of sampling and advertising.
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