Assessing marketing resource allocation in retail
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This dissertation examines two problems retailers face when assessing their marketing resource allocation. In the first chapter, I develop a conceptual framework and modeling approach to help retailers assess how online and offline marketing effectiveness vary by channel, customer value segment, and country. In the main application, using a retail dataset from six countries, I estimate Hierarchical Linear and Cross-Random Effects models to find that own- and cross-channel sales responsiveness to online and offline marketing varies by value segment and country. Specifically, direct mail drives offline sales for prospects cross all countries and email drives both online and offline sales across customer segments in half of the countries. Customer value is the key driver of offline sales, while country is a key driver of online sales. I validate the findings with a second retail dataset and a field experiment. The different elasticities and customer segment sizes across countries imply a different marketing resource allocation from status-quo. The findings generate actionable implications for theory and managers. In the second chapter, I quantify the simultaneous effects of customer satisfaction (CS) and employee satisfaction (ES) on cross-buying. I jointly model the effects of CS and ES on cross-buying probability controlling for customer heterogeneity and time effects. The model accounts for nonlinear and asymmetric effects of satisfaction. Moreover, I examine whether the effects of CS and ES on cross-buying are non-monotonic. I employ panel datasets at individual customer and employee level on transactions and satisfaction of a leading car rental company. The results of the empirical analysis lead to four main findings. First, CS and ES have simultaneous effects on cross-buying probability. Second, the effect size of ES is about 2.7 times larger than the effect of CS. Third, the relationship between satisfaction and cross-buying is concave non-monotonic. For low satisfaction levels, an increase in satisfaction leads to higher cross-buying. However, for high levels of satisfaction, an increase in satisfaction leads to lower cross-buying. Fourth, CS and ES do not have an interaction effect on cross-buying probability.