Prof. Dr. Dr. h.c. Sönke Albers


Professor of Marketing and Innovation 


Journal Articles (Peer-Reviewed)

DOI: 10.1509/jmr.13.0580 

Abstract: To optimally set marketing communication (“marcom”) budgets, reliable estimates of short-term elasticities and carryover effects are required. Empirical generalizations from meta-analyses of prior field studies can help guide these decisions. However, the last such meta-analysis of marcom carryover effects was performed on Koyck model–based estimates collected before 1984 and was confined to mass media advertising. The authors update and extend extant empirical generalizations via two meta-analyses of carryover estimates compiled from studies encompassing personal selling, targeted advertising, and mass media advertising, using diverse model forms, until 2015. The first is focused on and utilizes 918 estimates of the carryover proportion of the total effect, termed long-term share of the total effect, and the second focuses on 863 derivable estimates of 90% implied duration intervals. The authors find the mean long-term shares of the total effect for personal selling (.687) and targeted advertising (.650) are distinctly larger than that for mass media advertising (.523) and the corresponding median 90% implied duration intervals are 12.6, 2, and 3.4 months, respectively. The authors conclude by discussing differences by model type and the implications for marcom budget-setting and analyses.

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Open reference in new window "A Meta-Analysis of Marketing Communication Carryover Effects"

DOI: 10.1007/s11116-015-9621-2 

Abstract: In recent years, management and academics have increasingly focused on quality management in public transport. In particular, many public transport operators regularly monitor their service quality over time and use these data to assess quality performance (e.g., for performance-based quality contracts) and to determine managerial decisions (e.g., budget allocations for service improvements). However, despite the widespread applications of service quality data in practice, it is unclear whether cross-sectional analyses and cross-temporal comparisons of service quality data provide valid insights for quality management purposes. In this study, we investigate the usability of cross-sectional analyses and cross-temporal comparisons of service quality data by conducting an empirical study that tracked a panel’s perceptions of the service quality of public transport and its choice over the course of three consecutive years. The results demonstrate that cross-sectional analyses provide valid insights for quality management. However, cross-temporal comparisons should be interpreted carefully because the results of these comparisons are surprisingly unreliable. In fact, we find that service quality data do not provide reliable results over time and therefore conclude that cross-temporal comparisons of service quality data must be interpreted with caution for quality management in public transport.

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Open reference in new window "The limits of analyzing service quality data in public transport"

DOI: 10.1007/BF03396921 

Abstract: How well universities prosper depends on their reputations, which in turn depend on high-level published research. I investigate German data from Handelsblatt and Centrum für Hochschulentwicklung (CHE) for university business faculties and show that publication productivity is characterized by increasing returns to scale, which stem from the number of professors a university employs, and that a higher ratio of students per professor does not usually hurt productivity. Third-party funds show only a small and weakly significant impact. My analysis of the total costs of universities indicates that publications, student education, and contract research all exhibit significant economies of scale.

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Open reference in new window "What Drives Publication Productivity at German Universities?"

DOI: 10.1080/08853134.2015.1085807 

Abstract: In the last half-century, significant advances have been made in directing sales force behavior with the use of optimization and decision models. The present paper both presents the current state-of-the art in sales force decision modeling, and also discusses key issues and trends in contemporary modeling of relevance to sales force researchers. The paper begins by exploring critical concepts regarding the estimation of the sales response function, and then discusses critical problems of endogeneity, heterogeneity, and temporal variation that are faced by modelers in this task. Modern approaches to dealing with these issues are presented. We then discuss areas of importance concerning finding model solutions, including closed form versus simulation, and optimization versus heuristic solutions. The paper next moves to areas of practical importance where models can help, including call planning, sales force size, territory allocation, and compensation design. Finally, we discuss trends that will likely impact on sales force modeling in coming years, including the use of big data and data mining, the possible breakdown of rationality, the rise of the Internet and social media, and the potential of agent-based modeling.

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Open reference in new window "Optimization Models in Sales Force Management: Review and Trends"

DOI: 10.1007/s11573-013-0675-3 

Abstract: Recent cases of unethical publication behavior have raised the question of how to address it. Because scientific misconduct (conduct inconsistent with accepted scientific standards) can occur on a continuum ranging from honest errors to outright fraud, there is a need to change editorial policies to reduce the existence of any gray areas. In the case of quantitative empirical research, misconduct begins with honorary and ghost authors, plagiarism and self-plagiarism, and extends to manipulation or even fabrication of data and the reporting of biased or false results. It is suggested that journals should retract articles, inform retraction watch more frequently, use plagiarism software, ask for better and more detailed documentation of procedures so that research can be replicated and potentially analysed as manipulation, and reveal possible affiliations that might lead to biases. These policies will also facilitate faster learning, which will be beneficial to society.

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Open reference in new window "Preventing Unethical Publication Behavior of Quantitative Empirical Research by Changing Editorial Policies"

Abstract: Marketing budget decisions are critical and should be fact based rather than intuitive. Profit can be improved by better allocating a fixed budget across products or regions. The Excel-based decision support model presented in this article makes it possible to determine near-optimal marketing budgets and represents an innovative and feasible solution to the dynamic marketing allocation budget problem for multi-product, multi-country firms. The model accounts for marketing dynamics and a product's growth potential as well as for trade-offs with respect to marketing effectiveness and profit contribution. It was successfully implemented at Bayer, one of the world's largest firms in the pharmaceuticals and chemicals business. The profit improvement potential in this company was more than 50 % and worth nearly EUR 500 million in incremental discounted cash flows.

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Open reference in new window "Dynamically Allocating the Marketing Budget: How to leverage profits across markets, products and marketing activities"

DOI: 10.1016/j.ijresmar.2012.03.001 

Abstract: The methodological discussion on the calibration of aggregate marketing response models has shifted away from how to obtain usable input for optimization toward how to avoid biases in statistical estimation. The purpose of this article is to remind researchers that such calibration is performed either to support managers in their marketing-mix decisions or to create general knowledge that leads to a better understanding of marketing relationships and thus indirectly supports decisions. Both goals require response models that are optimizable. The models must also be implementable if actual decision support is the objective. Herein, I identify several aspects for which these requirements are not always fulfilled: First, the appropriateness of the chosen functional form of the marketing response models is rarely discussed, although different forms imply quite different optimal solutions. Second, endogeneity is taken into account by structural equations, even though we lack sufficient information on how managers reach their decisions. Third, estimation methods for response models are often evaluated based on goodness-of-fit, while an assessment of their usefulness for subsequent optimization is neglected. Therefore, I provide recommendations for improving the current practice by better specifying the response function and undertaking more simulation-based evaluations of the best estimation method for use in subsequent optimization. With respect to implementation, usability can be facilitated using spreadsheets and heuristics. Moreover, gaining generalizable and replicable knowledge requires better documentation of results, which can be achieved through providing elasticities and as many details as are necessary to replicate a study, thereby enabling faster learning.

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Open reference in new window "Optimizable and implementable aggregate response modeling for marketing decision support"

DOI: 10.1287/mksc.1100.0627 

Abstract: Previous research on marketing budget decisions has shown that profit improvement from better allocation across products or regions is much higher than from improving the overall budget. However, despite its high managerial relevance, contributions by marketing scholars are rare.In this paper, we introduce an innovative and feasible solution to the dynamic marketing budget allocation problem for multiproduct, multicountry firms. Specifically, our decision support model allows determining near-optimal marketing budgets at the country--product--marketing--activity level in an Excel-supported environment each year. The model accounts for marketing dynamics and a product's growth potential as well as for trade-offs with respect to marketing effectiveness and profit contribution. The model has been successfully implemented at Bayer, one the world's largest pharmaceutical and chemical firms. The profit improvement potential is more than 50% and worth nearly €500 million in incremental discounted cash flows.

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Open reference in new window "Practice Prize Winner - Dynamic Marketing Budget Allocation Across Countries, Products, and Marketing Activities"

DOI: 10.1016/j.indmarman.2010.04.001 

Abstract: The management and controlling of the industrial project acquisition process, with its staged, funnel-like structure, has been neglected in empirical research so far—even though an effective acquisition process is crucial for economic success. In addition to profitability, the main goal of industrial companies is to implement a pipeline process that ensures that the pipeline is always filled with acquisition projects and results in a constant stream of orders over time. The projects considered are characterized by complexity, uniqueness, and discontinuity. Based on a large-scale survey among German industrial companies, we describe the industrial project acquisition process, where the projects mentioned above are sold on a non-continuous basis to industrial customers. We assess how the industrial project acquisition process is really structured, whether a sales funnel management is applicable and utilized by sales management to monitor and control this process, and whether a sophisticated sales funnel management contributes to enhanced economic success.

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Open reference in new window "Pipeline management for the acquisition of industrial projects"

DOI: 10.1509/jmkr.47.1.103 

Abstract: The authors analyze primary demand effects of marketing efforts directed at the physician (detailing and professional journal advertising) versus marketing efforts directed at the patient (direct-to-consumer advertising). The analysis covers 86 categories, or approximately 85% of the U.S. pharmaceutical market, during the 2001–2005 period. Primary demand effects are rather small, in contrast with the estimated sales effects for individual brands. By using a new brand-level method to estimate primary demand effects with aggregate data, the authors show that the small effects are due to intense competitive interactions during the observation period but not necessarily to low primary demand responsiveness. In contrast with previous studies, the authors also find that detailing is more effective in driving primary demand than direct-to-consumer advertising. A category sales model cannot provide such insights. In addition, a category sales model likely produces biased predictions about period-by-period changes in primary demand. The suggested brand-level method does not suffer from these limitations.

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Open reference in new window "Patient- or physician-oriented marketing: What drives primary demand for prescription drugs?"

DOI: 10.2753/JEC1086-4415140401 

Abstract: Knowledge of consumers' willingness-to-pay (WTP) is critical for marketing managers when designing optimal pricing policies. The large-scale applicability, reliability, and validity of Vickrey auctions as an incentive-compatible method for eliciting WTP in a real-world setting were tested empirically. The results of 6,548 sealed bids in 28 auctions of costly durables on a popular auction Web site show that regular on-line shoppers have little problem understanding and applying the Vickrey auction bidding strategy. As a result, Vickrey auctions can easily produce a reliable and valid distribution of WTP based on several thousand consumers. A comparison of Vickrey auctions with the more commonly used English or eBay auctions shows, both conceptually and empirically, that the latter formats do not fully reflect the complete range of potential customers' WTP and, therefore, lead to systematic overestimation of price-demand functions. In contrast, WTP information elicited through Vickrey auctions is undistorted by strategic behavior such as bid-sniping and incorporates the full range of WTP information, suggesting that it is better suited for estimating realistic price-demand functions for market research purposes.

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Open reference in new window "Vickrey vs. ebay: Why second-price sealed-bid auctions lead to more realistic price-demand functions"

Abstract: Although companies that sell products such as automobiles can easily track down their clients, companies that produce consumer goods usually lose direct contact with their customers at the retailer’s cash register. This anonymity results in the obligation to communicate any product failure and/or recall action to a wide range of anonymous and potential customers, while running the risk of scaring off future buyers. Hypothesizing that companies know how to best communicate a recall, we investigate a sample of 104 German recall campaigns to identify common dimensions of recall messages and behavioral drivers that may minimize the risk of alienating future customers and reduce potential sales losses due to the product crisis. We identify six major underlying dimensions of recall messages and find empirical evidence for existing recall routines of companies depending on the degree of hazard and the probability of a product defect.

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Open reference in new window "Communication Behavior of Companies in Product Recalls Without Customer Identification Information"

DOI: 10.1007/s11573-010-0367-1 

Abstract: Quantitative decision models are used only if managers’ implementation conditions are met. Decision makers want tools that offer a set of good solutions so that they can evaluate different solutions according to various objectives without being forced to make their trade-offs explicit in a functional form. This also allows taking into account strategic aspects that cannot be modeled otherwise. In such situations, heuristics are needed which derive solutions from the structure and not so much from the mathematical properties. We present such a decision support tool for the problem of determining a menu of optional tariffs for checking accounts. The heuristic is based on the idea that for reasonably separable preferences across segments it is the best to offer for each segment the most preferred product. We use latent class choice-based conjoint analysis to estimate customer preferences and develop a customized choice-based conjoint design to take differences in individual demand into account. The proposed heuristic was used to support an actual decision problem for which the profit contribution has been increased substantially without having faced a considerable loss of customers.

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Open reference in new window "Entscheidungsunterstützung unter Berücksichtigung der Anforderungen von Entscheidungsträgern am Beispiel der Gestaltung von optionalen Girokonto-Tarifen"

Abstract: This article discusses performance drivers of CRM projects and is particularly relevant for managers seeking to optimize their companies CRM efforts. Despite the billions of dollars that have been spent on the implementation of customer relationship management (CRM) systems, many of the adopting companies are unhappy with the results. This can be due to two reasons: first, either the CRM projects are poorly implemented and thus do not perform accordingly, or, second, companies expect too much from CRM systems. This research examines how technological and organizational implementations as well as internal support affect the objectives of CRM with regard to initiating, maintaining, and retaining customer relationships. The results indicate that internal support is an important factor for the performance of CRM implementation. Further, it helps to have a clear focus for a CRM system to specifically address diverse functions such as the acquisition, maintenance, and retention of customers and to tailor implementation effort to the needs of the major functions.

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Open reference in new window "Left Behind Expectations: How to prevent CRM implementations from failing"

DOI: 10.1509/jmkr.47.5.840 

Abstract: This article presents a meta-analysis of prior econometric estimates of personal selling elasticity—that is, the ratio of the percentage change in an objective, ratio-scaled measure of sales output (e.g., dollar or unit purchases) to the corresponding percentage change in an objective, ratio-scaled measure of personal selling input (e.g., dollar expenditures). The authors conduct a meta-analysis of 506 personal selling elasticity estimates drawn from analyses of 88 empirical data sets across 75 previous articles. They find a mean estimate of current-period personal selling elasticity of .34. They also find that elasticity estimates are higher for early life-cycle-stage offerings, higher from studies set in Europe than from those set in the United States, and smaller in more recent years. In addition, elasticity estimates are affected significantly by analysts' use of relative rather than absolute sales output measures, by cross-sectional rather than panel data, by omission of promotions, by lagged effects, by marketing interaction effects, and by the neglect of endogeneity in model estimation. The method bias–corrected mean personal selling elasticity is approximately .31. The authors discuss the implications of their results for sales managers and researchers.

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Open reference in new window "Personal selling elasticities: A meta-analysis"

DOI: 10.1007/s11002-010-9111-4 

Abstract: Inspired by Erin Anderson’s contributions to sales force research, this paper focuses on research that utilizes quantitative models to investigate important questions in sales force management. The purpose is to summarize several significant developments in knowledge over the last 40 years and identify major opportunities for impactful theoretical, empirical, and decision model-based research in the future.

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Open reference in new window "Sales force modeling: State of the field and research agenda"

DOI: 10.1007/BF03343526 

Abstract: This issue offers for the first time supplementary material to articles. It consists of Excel files providing data the research is based on, calculation sheets, and optimization tools. Moreover, text files with pseudo code of algorithms and data of instances used for testing these algorithms as well as a video file with a demonstration of the use of a system in experiments are supplied for download. This material facilitates the understanding of the published articles and the replication of their findings to the benefit of scientific progress. And last but not least, such well documented articles will achieve much more impact.

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Open reference in new window "Editorial: Well Documented Articles Achieve More Impact"

DOI: 10.1016/j.ijresmar.2009.03.006 

Abstract: In recent years, customer relationship management (CRM) has been a topic of the utmost importance for scholars and managers. Despite the evidence provided by numerous empirical studies, many companies that have implemented CRM systems report unsatisfactory levels of improvement. This study analyzes what influence companies can expect CRM implementation to have on performance and how they can leverage its impact. The authors propose a conceptual model that investigates the link between technological and organizational implementations, as well as the implementations' interactions with management and employee support and CRM process-related performance. By measuring CRM performance in terms of the initiation, maintenance, and retention of customer relationships, the study provides a detailed picture of what CRM implementations are capable of achieving. The results of the empirical study, conducted across four industries and ten European countries, indicate that CRM implementation does not impact performance equally for different aspects of the CRM process, and that it has an impact only if adequately supported by the appropriate company stakeholders.

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Open reference in new window "The impact of technological and organizational implementation of CRM on customer acquisition, maintenance, and retention"

DOI: 10.1111/j.1468-0475.2009.00484.x 

Abstract: The attempts by Schulze and colleagues and Ritzberger to develop a joint ranking of journals for economics and business research are critically evaluated. Their lists suggest that the quality of top business journals is substantially lower than that of many economics journals. If, however, the authors of these lists do not want to claim a general superiority of one discipline (economics) over another one (business), they should give a clear indication that these lists are only applicable for economists. This warning appears to be necessary because Fabel and colleagues derive a ranking of universities and departments with respect to research productivity in business from the business research discriminating list RbR_IMP by Schulze and colleagues. While Diamantopoulos and Wagner already show a lack of face validity of these results, this article explains that the reason for this lies not only in the downgrading and also biased weighting of the business journals across subfields, but even more importantly, in a remarkable incompleteness of the database.

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Open reference in new window "Misleading rankings of research in business"

DOI: 10.2753/PSS0885-3134280203 

Abstract: The time and budgets that managers can devote to enhancing sales force productivity are limited, so sales managers must decide where it is worthwhile to invest in productivity improvements—to improve salespeople’s current effort allocation, realign territories, enhance sales force sizing, or provide more training. To prioritize these alternatives, management must assess the outcomes of investments on the basis of a common metric—profit. This paper proposes to estimate a core sales response function that allows for quantifying the profits derived from each possible action and demonstrates the benefits of this approach through an actual case study.

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Open reference in new window "Prioritizing sales force decision areas for productivity improvements using a core sales response function"

DOI: 10.1007/BF03371693 

Abstract: This article discusses the often ignored impact of sample selection bias in empirical research in business administration. Our empirical application based on the motion picture industry underlines the importance of this procedure. We find a significant impact of a nomination for the Academy Award (Oscar), if we follow the standard estimation procedures from the literature using regression analysis. However, if we correct our sample for the selection bias we do not find a significant impact of an Oscar nomination on box office anymore.

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Open reference in new window "Was bringt ein Oscar im Filmgeschäft? Eine empirische Analyse unter Berücksichtigung des Selektionseffekts"

DOI: 10.1007/s11573-007-0040-5 

Abstract: Previous empirical research on order of entry effects shows strong evidence for the existence of a first-mover advantage. Conventional strategic recommendations are therefore based on the assumption that pioneering is preferable in order to create competitive advantages. However, theoretical work has argued that there are also considerable potential advantages for early movers. But this hypothesis lacks empirical evidence, which is due to the limitations of previous empirical research designs. On the one hand, early movers have not been precisely separated from pioneers and late movers. On the other hand, previous research designs often specified a monotone relationship between order of entry and a success variable. As a consequence, it was not possible to find an inverted u-shaped relationship supporting the early mover advantage hypothesis. In this study, authors propose ways to overcome these limitations. An empirical application to 12 pharmaceutical markets finds a surprising early mover advantage that contrasts with the conventional wisdom in this industry.

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Open reference in new window "Pionier, Früher Folger oder Später Folger: Welche Strategie verspricht den größten Erfolg?"

DOI: 10.15358/0344-1369-2007-1-8 

Abstract: Managers facing the introduction of usage innovations have to cope with three interrelated problems: Which products are suitable for which segments, how to determine the characteristics of the segments for targeting them, and how to optimize the prices of bundles. We show that this can be achieved by applying a latent class analysis based on data obtained with the help of choice-based conjoint experiments. Using survey data on services in digital TV as an example, the authors show how strategic implications for product configuration, targeting, and bundle pricing can be derived. A comparison with real market data indicate that the results obtained by this procedure are highly plausible.

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Open reference in new window "Messung von Zahlungsbereitschaften und ihr Einsatz für die Preisbündelung: Eine anwendungsorientierte Darstellung am Beispiel digitaler TV-Programme"

DOI: 10.1109/TEM.2007.893985 

Abstract: Although there is a growing amount of theoretical literature, only limited attention has been allocated to empirically determine the relative influence of a broad set of strategic success factors of e-business companies across several industries. We concentrate on the impact of marketing strategies and chosen business models and differentiate between direct and indirect drivers on revenue and profitability in order to estimate the total effect of a certain strategy or business model. Based on a survey of 147 e-businesses from different industries we empirically test, with the help of seemingly unrelated regression models, the relative importance of the various strategy elements. Our estimation results show that business models where the firm profits from transactions (e.g., via fixed access or usage fees) and is able to sell pricy products and services are well suited to reach profitability. The by far most important element of the marketing strategy is the achieved customer satisfaction, which has a significant and strong effect on revenue, but only a moderate direct effect on profitability. Due to our modeling approach we find that the total elasticity of this element of the marketing strategy is driven by the indirect effect from revenue on profitability

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Open reference in new window "Analyzing the success drivers of e-business companies"

DOI: 10.1007/BF03371642 

Abstract: We demonstrate methodological problems with the application of the so called “Cronbach’s α — LISREL”-paradigm. Working with unobserved latent constructs operationalized through indicators allows for differentiating into a measurement and structural model. However, while the elimination of internally inconsistent indicators is correct for reflective indicators, this proves to be incorrect for the mostly formative indicators in success factor studies. This neglects important facets of the problem which lead to results that vary according to the included indicator set. In this context, the analysis of structural equation models with LISREL is not appropriate because it can handle only reflective indicators while PLS allows for formative indicators. However, in the latter case it is often better to apply ordinary least squares regression to the battery of indicators because multicollinearity has to be dealt with in both, PLS and OLS, while regression models can handle nonlinear relationships as well as unobserved heterogeneity.

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Open reference in new window "Methodische Probleme bei der Erfolgsfaktorenforschung - Messfehler, formative versus reflektive Indikatoren und die Wahl des Strukturgleichungs-Modells"

DOI: 10.1007/978-3-663-11030-9_4 

Abstract: Innerhalb des Customer Relationship Management liegt der Schwerpunkt auf dem Bindungsmanagement, während das Akquisitionsmanagement wenig Aufmerksamkeit erfahren hat. Betrachtet man das industrielle Projektgeschäft, das durch wenige Interessenten und vorwiegend einmalige Transaktionen gekennzeichnet ist, so spielen dort der Akquisitionsaufwand und die Anzahl der Akquisitionsversuche eine Rolle. Anhand einer Anwendung, bei der die Wahrscheinlichkeitsfunktion der Akquisition von Aufträgen in Abhängigkeit von den Akquisitionsaufwendungen empirisch geschätzt worden ist, wird der optimale Akquisitionsaufwand hergeleitet. Akquisitionen erstrecken sich über mehrere Phasen. Mit Hilfe von Markov-Ketten wird gezeigt, wie man bestimmen kann, für welche Projekte die Akquisitionsbemühungen in der jeweils nächsten Phase fortgesetzt werden sollen. Das sich in der Pipeline befindende zukünftige Projektgeschäft sollte sich gemäß einem Funnel (Verkaufstrichter) gestalten. Dazu ist das Controlling-Instrument des Sales Funnel Management entwickelt worden.

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Open reference in new window "Akquisitionsmanagement im industriellen Projektgeschäft"

DOI: 10.1016/j.ijresmar.2003.11.001 

Abstract: In this paper, we take an integrated view of Transaction Cost Analysis (TCA) and Agency Theory (AT) in order to study the direct salesforce vs. rep decision and the design of compensation plans in German salesforces. We test, with a single data set, a set of established and new hypotheses of both theories in the context of both decisions. This allows us to assess the complementarity of AT and TCA by estimating the relative explanatory power of the two frameworks for each of the two decisions. On the one hand, we find support for most of the established hypotheses. However, the hypothesized effect of uncertainty is rejected in our data set. Moreover, we document the impact of some new variables. We also find that, while AT does not add much to explain the decision of direct vs. rep in our data, TCA is equally limiting in helping understand the design of salesforce compensation plans. Therefore, one has to be cautious in treating AT and TCA as complementary theories.

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Open reference in new window "Relative explanatory power of agency theory and transaction cost analysis in German salesforces"

DOI: 10.1007/BF03396633 

Abstract: Almost all results on competitive product positioning derived in the literature so far are based on the hypothesis that static Nash equilibria of profit-maximizing competitors are accurate predictors of final market configurations. If the positioning behavior of firms differs from this assumption, it is questionable whether the corresponding propositions can be used in optimal product positioning. In this paper, we explore the validity of the Nash reaction hypothesis. We use a newly developed marketing simulation game, PRODSTRAT, to observe decisions of 240 advanced marketing students on product position, price, and marketing budget under various market conditions. We compare the players’ final configurations to Nash equilibria under the assumption that all players attempt to maximize their profit. Our results show that pricing and budgeting decisions are very well described by Nash equilibria for fixed product positions, but that decisions on product positioning are significantly more competitive. The experiments lead to less differentiated market configurations. The result is increased pricing as well as budgeting competition, and significantly reduced profits. We develop and support the hypothesis that the more aggressive product positioning behavior observed here stems from attempts to reduce profit differences (asymmetry) relative to competitors. Since profit asymmetry occurs in many market settings, it is an important factor to consider in making product positioning decisions in a competitive environment.

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Open reference in new window "Experiments in competitive product positioning: Actual behavior compared to Nash solutions"

DOI: 10.1007/s002910050003 

Abstract: We investigate the problem of companies that want to cooperate either by combining their salesforces or by operating a joint salesforce. Companies may have salesforces of different sizes that also differ in their effectiveness. They need an instrument to evaluate how much they gain from a cooperation, and a mechanism to allocate the profit in a fair way. In the typical case of a lack of response data we suggest to infer additional sales based on response functions for which the Dorfman-Steiner theorem is holding in the optimum. Searching for an appropriate allocation mechanism becomes difficult because typical cooperative solutions where each company pays its own salesforce but benefits from increased sales, or where commission rates on sales are paid to a joint subsidiary, may lead to asymmetric distributions of profit contribution across companies. We suggest that companies follow the Nash-solution for cooperative games which recommends that each company receive in advance the profit it would achieve in the case of non-cooperation, and that the remaining profit be shared equally.

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Open reference in new window "Optimal allocation of profit across companies operating with a joint salesforce: Optimale Allokation von Deckungsbeiträgen bei Unternehmen mit einem gemeinsamen Vertrieb"

Abstract: The selling process in business-to-business transactions is characterized by substantial resources that are invested to gather inquiries, engineer projects, and organize the cooperation of subcontractors. In this manuscript we show that common business practices of separately evaluating each project very often lead to suboptimal decisions. A literature review also reveals that current approaches offer little help to differentiate across more or less profitable and promising projects. We develop and calibrate a model that helps to determine the optimal budget levels that should be spent for gathering inquiries and for winning the contract. This is modelled by the means of a two-stage approach: The expected profit of a potential project is the product of the probability of gathering an inquiry and the expected profit of the inquiry minus the budget for gathering the inquiry (1st stage). The expected profit again is the product of the probability of finally winning the contract and the expected gross margin minus the budget for winning the contract (2nd stage). In a realistic business case, we show that one need not necessarily run complex statistical analyses to arrive at nearly optimal solutions. Rather, the structure of the optimal solution can be simplified to a heuristic that provides near-optimal values.

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Open reference in new window "Regeln zur Bestimmung des fast-optimalen Angebotsaufwands"

DOI: 10.1007/BF03372627 

Abstract: In markets with more or less interchangeable products, the design of buyer-seller relationships may become a critical factor to differentiate the firm from competitors. In this paper, we focus on how to optimally allocate scarce resources across customers. We show that there is need to segment customers in order to optimally design marketing and personal selling resources (e.g., budgeting, call planning). We show that an optimal allocation of resources has to consider a customer’s size (sales, marginal profit contribution) and responsiveness to marketing measures (elasticity). Against this background, we discuss all segmentation approaches in detail. It is shown that portfolios and scoring approaches are most helpful in segmenting customers in accordance with their economic value. However, these approaches lead to near-optimal solutions only if they first identify criteria which influence size and responsiveness and then optimally weight these criteria. Optimal weights are derived by determining the elasticity of size or responsiveness with respect to these criteria. These weights must be multiplied by the relative changes of the scores of the influencing criteria, summed for size and responsiveness separately, and then finally multiplied by each other.

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Open reference in new window "Ansätze zur Segmentierung von Kunden - wie geeignet sind herkömmliche Konzepte?"

DOI: 10.1007/BF03371503 

Abstract: The problem of optimally allocating a scarce resource with impact on sales across products or market segments has been addressed in the marketing literature by statistically estimating the response functions and applying a nonlinear optimization algorithm. In contrast, managers typically use simple but nonoptimal allocation rules such as budgets proportional to past or planned sales. Here, a new and easy to implement rule is derived from the property that in the optimum the product of profit contribution and the respective elasticity should be equal across products and segments. The goodness of traditional rules as well as the new one is investigated with the help of a computer simulation experiment. The results show that the new rule is superior, provides very good solutions already in the first application, near-optimal solutions after a few consecutive applications and converges to the optimum.

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Open reference in new window "Regeln für die Allokation eines Marketing-Budgets auf Produkte oder Marktsegmente"

DOI: 10.1016/S0167-8116(97)00038-4 

Abstract: Marketing controllers traditionally analyze the profit contribution variance between actual and plan by decomposing it into a quantity and a price variance. This, however, enables them only to identify areas where problems exist rather than to diagnose their causes. In order to get more insights, this paper proposes making the planning assumptions for achieving a certain profit contribution explicit beforehand by specifying appropriate response functions. This information can be used after the fact to calculate the amount of profit contribution variance associated with different sources. In particular, the paper offers a novel decomposition principle of total variance into partial variances associated with possible sources such as incorrect market response assumptions (planning variance), deviations of actual marketing actions from planned ones (execution variance) and misanticipation of competitive reactions (reaction variance). Each of these variances can be decomposed further into the separate effects of single marketing instruments. By distinguishing between a response function for market share and one for market size, controllers can also estimate for which part of the variance the product manager may be responsible.

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Open reference in new window "A framework for analysis of sources of profit contribution variance between actual and plan"

Abstract: Ten years ago Albers/Peters (1997) analyzed the impact of eCommerce on the retail value chain. Since then major change has taken place. Apart from the expected unbundling of several retail activities along the value chain, especially the consumer buying process has been taken online and increasingly supported by new infomediaries. Those new infomediaries have taken the retailer's traditional ground. New technologies, applications and a changing consumer behavior will confront today's market players, infomediaries as well as offline-, online- and multichannelretailers, with even bigger challenges.

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Open reference in new window "Die Wertschöpfungskette des Handels im Zeitalter des Electronic Commerce"

DOI: 10.1016/S0377-2217(96)90046-6 

Abstract: This paper reviews models which address the design of optimal salesforce compensation schemes. The discussion starts with agency theoretic models that are able to derive the optimal form for a compensation scheme under assumptions regarding the degree of information asymmetry and heterogeneity within the salesforce. For the four resulting extreme cases, models are presented that allow for the determination of optimal parameter values for specific compensation schemes such as fixed salary plus commission, bonus for quota achievement, and menus of plans. Finally, there follows an examination of approaches through which commission rates or bonuses can be optimally differentiated, such that the salespersons allocate their selling time in their own - and at the same time in the firm's - best interest. All of these models are reviewed in particular with respect to their applicability in practice.

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Open reference in new window "Optimization models for salesforce compensation"

DOI: 10.1108/09684909710155547 

Abstract: Describes the decision‐support system CAPPLAN. CAPPLAN has been developed for firms which sell their products through a salesforce to industrial customers or wholesalers and retailers. Explains that in such situations, it is common practice to negotiate the price based on guidelines provided by the sales management. Details how CAPPLAN offers a jointly optimal differentiation of prices and allocation of calling effort across account groups subject to both a limited production capacity and working‐time capacity, and also provides a parametric optimization of prices and calling effort for varying levels of production capacity. Reports how the system has been applied at an industrial photo laboratory selling the development of film and the production of prints through retailers, resulting in a substantial improvement in profits.

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Open reference in new window "CAPPLAN: a decision-support system for planning the pricing and sales effort policy of a salesforce"

Abstract: Der optimale Entlohnungsplan fuer Verkaufsaussendienstmitarbeiter laesst sich im Rahmen typischer Prinzipal-Agenten-Modelle bestimmen.Empirische Untersuchungen haben jedoch gezeigt, dass die Ergebnisse der theoretischen Analyse nicht mit den in der Praxis zu beobachtenden Entlohungsplaenen uebereinstimmen.

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Open reference in new window "Optimales Verhältnis zwischen Festgehalt und erfolgsabhängiger Entlohnung bei Verkaufsaussendienstmitarbeitern"

Abstract: In dieser Arbeit wird das von mir in der ZfB 6/1989 vorgestellte, aber auf die Auswirkungen der Preispolitik beschraenkte System zur Ursachenanalyse von IST-SOLL-Erloesabweichungen erweitert. Am Beispiel der Werbung und der Distribution wird gezeigt, wie die von einzelnen Marketing-Instrumenten ausgehenden Erloesabweichungen isoliert werden koennen. Da der Einsatz der Marketing-Instrumente Kosten verursachen wird, wird die Analyse ausserdem auf die Ebene der Deckungsbeitragsabweichungen gehoben.

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Open reference in new window "Ursachenanalyse von marketingbedingten IST-SOLL-Deckungsbeitragsabweichungen"

Abstract: Will ein Unternehmen sich langfristig im Wettbewerb behaupten, so muß es systematisch neue Produkte entwickeln und einführen. Entsprechende Innovationsprozesse sind allerdings risikobehaftet und führen erst langfristig zu positiven Ergebnissen, während sie kurzfristig Kosten verursachen. In Unternehmen mit Trennung von Eigentum und Leitung stehen dem Innovationserfordernis häufig andersgelagerte Interessen der Geschäftsführung gegenüber: Angestellte Manager neigen vielfach zu kurzfristig orientiertem und risikoaversem Verhalten. Ein solches Verhalten kann durch Prestige- und Machtbestrebungen motiviert sein. Auch Sicherheitsziele können eine Rolle spielen, da beim Fehlschlagen risikobehafteter Investitionen eventuell Zeitverträge nicht verlängert werden. Häufig werden Kurzfristorientierung und Risikoscheu durch dysfunktionale Anreize wie etwa eine an kurzfristigen Ergebnissen orientierte variable Entlohnung oder ein kurzfristig orientiertes Berichtswesen verstärkt.

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Open reference in new window "Innovationsanreize für Geschäftsführer"

DOI: 10.1016/0167-8116(84)90018-1 

Abstract: The special conjoint-analysis problem of estimating the parameters of a continuous nonlinear utility function from ordinal rank order data is investigated. A special purpose estimation method, called NONCON, is proposed that offers two advantages: First, it is capable of directly maximizing Kendall's rank order correlation coefficient T as the appropriate measure of goodness of fit. Second, it requires less computational effort than competing procedures using general purpose conjointanalysis programs. The superiority of NONCON is demonstrated for the estimation of a continuous nonlinear two-parameter utility function the parameters of which serve as input for the optimization of sales force compensation schemes.

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Open reference in new window "Fully nonmetric estimation of a continuous nonlinear conjoint utility function"

DOI: 10.1007/BF01720155 

Abstract: A new column enumeration algorithm for solving the Set-Partitioning Problem is presented. It is not based on the staircase form of the coefficient matrix. Rather, it uses a preordering of the variables with respect to their cost of covering one row that is a supposition of a new strong lower bound concept. The enumeration process itself is organized similar to a general branch-and-bound concept. The performance of the algorithm is evaluated on the basis of a systematic comparison with different variants of the wellknown algorithms by Pierce and Garfinkel-Nemhauser. The computational experiences indicate that the new algorithm is superior for problems with moderatly dense coefficient matrices.

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Open reference in new window "Implicit enumeration algorithms for the set-partitioning problem"

DOI: 10.1057/jors.1980.122 

Abstract: Product positioning is concerned with the determination of new product attributes such that certain objectives can be met. Recently, Zufryden proposed a model for optimal product positioning with respect to sales. It relies on the single choice assumption, i.e. consumers choose that product closest to their ideal product perceptions. To improve solvability, Zufryden suggests to solve his model via an approximate procedure, called ZIPMAP. This procedure is compared with an exactly optimising algorithm for the same problem, called PROPOSAS. Comparisons are drawn with respect to the solution values of the objective functions and the CPU-time requirements. The results indicate a superiority of PROPOSAS for a vast number of problem types.

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Open reference in new window "Optimal product attributes in single choice models"

DOI: 10.1016/0377-2217(79)90142-5 

Abstract: Optimal product positioning in an attribute space has been formulated according to the axiom of choice as a mixed integer nonlinear programming problem. To solve it, Albers and Brockhoff have designed the special purpose algorithm PROPOSAS. It works under simplified assumptions: Euclidean metric, equally weighted dimensions of the attribute space and equal sales per customer. The following article shows that the basic ideas of PROPOSAS are flexible enough to be expanded to cover a weighted Minkowski-metric as well as different revenues from the customers. Furthermore, the calculation of a new upper bound is described which reduces CPU-time considerably.

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Open reference in new window "An extended algorithm for optimal product positioning"

DOI: 10.1007/BF01951547 

Abstract: This paper is concerned with the optimal positioning of a new product in an attribute space. A deterministic optimization model that relies on the axiom of choice is compared with the model byShocker/Srinivasan [1974] that incorporates a probabilistic measure of choice. Investigating the assumptions and the construction of both models, it is shown that the probability function byShocker/Srinivasan is based on a controversial assumption and incorporates a parameter that has not been given an economic explanation. Furthermore, both models are applied to complex configurations. It is demonstrated that the optimal positions for the new product resulting from the model byShocker/Srinivasan depend heavily on the parameter just mentioned and may run contrary to plausible consequences of the axiom of choice.

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Open reference in new window "A comparison of two approaches to the optimal positioning of a new product in an attribute space"

DOI: 10.1016/0377-2217(77)90092-3 

Abstract: Planning a preferred position of a new product in an attribute space may be considered as a mixed integer non-linear programming problem. A procedure to solve this problem is described which draws on some special features of the problem. Optimality considerations of the procedure as well as computational experiences with it are reported.

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Open reference in new window "A procedure for new product positioning in an attribute space"

Journal Articles (Professional)


Abstract: „Vertriebsmanagement“ vermittelt anspruchsvoll und zugleich praxisnah, wie Außendienste professionell geführt und gesteuert werden können. Dabei greifen Sönke Albers und Manfred Krafft auf aktuellste Ergebnisse der internationalen Forschung zurück, verwenden Beispiele und Fallstudien aus dem europäischen bzw. deutschsprachigen Raum und belegen ihre Hinweise mit umfassenden eigenen Studien. Kurzum: ein Buch von Vertriebsexperten für Vertriebsexperten. Die Autoren schaffen ein deutschsprachiges Standardwerk, das sowohl als Grundlage der Ausbildung im BWL-Bachelor- und Masterstudium oder an Fortbildungsinstitutionen Verbreitung finden wird als auch akademisch interessierten Vertriebsmanagern kompetente Hinweise zum professionellen Management von Verkaufsaußendiensten bietet.

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Open reference in new window "Vertriebsmanagement"

Conference Proceedings

Book Chapters