Imperial College London

Mushegh Harutyunyan

Business School

Assistant Professor in Marketing
 
 
 
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384Business School BuildingSouth Kensington Campus

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Summary

 

Publications

Publication Type
Year
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4 results found

Diao W, Harutyunyan M, Jiang B, 2023, Consumer fairness concerns and dynamic pricing in a channel, Marketing Science, Vol: 42, Pages: 569-588, ISSN: 0732-2399

The extant literature has shown that when a firm increases its price due to increased demand orconsumer valuation, some consumers may have fairness concerns and experience psychological disutilitywhen buying the firm’s product. This paper provides a two-period model to study the effects of consumers’fairness concerns on firms’ dynamic pricing strategies and profits in a channel. Our analysis reveals astrategic link between the two periods—the retailer has a cost-reduction incentive of lowering its first-period price to induce the manufacturer to reduce the wholesale price in the second period. When theretailer’s cost-reduction incentive prevails, in equilibrium, the retail price stays unchanged while thewholesale price decreases over time. Hence, our results provide an alternative explanation for the empiricalobservation that retail prices typically do not decrease when wholesale prices do (Anderson et al. 2015).Further, we find that a higher demand increase in the second period can lead to a decrease in both wholesaleand retail prices. Importantly, we show that consumer fairness concerns can result in a win-win outcomefor the manufacturer and the retailer, which suggests that firms may prefer not using tactics such as priceframing to alleviate fairness concerns.

Journal article

Amaldoss W, Harutyunyan M, 2022, Pricing of Vice Goods for Goal-Driven Consumers, Management Science, ISSN: 0025-1909

Research in psychology shows that consumption goals can help consumers avoid excessive consumption of vice goods and the associated long-term harm. In this paper, we propose a model of self-control with consumption goals and examine how goals moderate the behavior of consumers and the firm's strategy. We find that consumers' personal goals lead to a lower price for a less unhealthy product, but a higher price for a more unhealthy product. Furthermore, even though personal goals reduce the sales of a product, the firm can be better off if consumers have goals rather than no goals. The improvement in the firm's profits need not be at consumers' expense. In fact, consumer welfare increases with personal goals. In some contexts, consumption is not driven by personal goals but shaped by social norms, such as the advice of experts or social groups. We find that unlike personal goals, normative goals make consumers less sensitive to price and do not always improve consumer welfare. Furthermore, normative goals can hurt the firm's profits in contexts where personal goals could improve profits. Finally, we show that our framework with dynamically inconsistent preferences yields results that are consistent with alternative formulations of consumer self-control problems, such as the dual-self model of Thaler and Shefrin (1981) and the costly self-control model of Gul and Pesendorfer (2001).

Journal article

Harutyunyan M, Jiang B, 2019, The Bright Side of Having an Enemy, Journal of Marketing Research, Vol: 56, Pages: 679-690, ISSN: 0022-2437

<jats:p> Conventional wisdom suggests that more intense competition will lower firms’ profits. The authors show that this may not hold in a channel setting with exclusive retailers. They find that a manufacturer and its retailer can both become worse off if their competing manufacturer and retailer with quality-differentiated products exit the market. Put differently, in a channel setting, more intense competition can be all-win for the manufacturer, the retailer, and the consumers. Interestingly, a high-quality manufacturer can benefit from an increase in its competitor’s perceived quality (e.g., due to favorable product reviews from consumers or third-party rating agencies). In other words, a manufacturer may prefer a strong rather than a weak enemy, and the manufacturer can have an incentive to help its competitor improve product quality or remain in the market. Furthermore, the authors show that a multiproduct monopolist manufacturer with an exclusive retailer may make higher profits by spinning off a product into a competing manufacturer that has its own retail channel, even without accounting for any proceeds from the spinoff. </jats:p>

Journal article

Harutyunyan M, Jiang B, 2017, Strategic Implications of Keeping Product Value Secret from Competitor’s Customers, Journal of Retailing, Vol: 93, Pages: 382-399, ISSN: 0022-4359

Journal article

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