Reference groups and product line decisions: An experimental investigation of limited editions and product proliferation

Some luxury goods manufacturers offer limited editions of their products, whereas some others market multiple product lines. Researchers have found that reference groups shape consumer evaluations of these product categories. Yet little empirical research has examined how reference groups affect the product line decisions of firms. Indeed, in a field setting it is quite a challenge to isolate reference group effects from contextual effects and correlated effects. In this paper, we propose a parsimonious model that allows us to study how reference groups influence firm behavior and that lends itself to experimental analysis. With the aid of the model we investigate the behavior of consumers in a laboratory setting where we can focus on the reference group effects after controlling for the contextual and correlated effects. The experimental results show that in the presence of strong reference group effects, limited editions and multiple products can help improve firms' profits. Furthermore, the trends in the purchase decisions of our participants point to the possibility that they are capable of introspecting close to two steps of thinking at the outset of the game and then learning through reinforcement mechanisms. © 2010 INFORMS.

Inter-annual variability of precipitation constrains the production response of boreal Pinus sylvestris to nitrogen fertilization

© 2015 Published by Elsevier B.V.Tree growth resources and the efficiency of resource-use for biomass production determine the productivity of forest ecosystems. In nutrient-limited forests, nitrogen (N)-fertilization increases foliage [N], which may increase photosynthetic rates, leaf area index (L), and thus light interception (IC). The product of such changes is a higher gross primary production and higher net primary production (NPP). However, fertilization may also alter carbohydrate partitioning from below- to aboveground, increasing aboveground NPP (ANPP). We analyzed effects of long-term N-fertilization on NPP, and that of long-term carbon storing organs (NPPS) in a Pinus sylvestris forest on sandy soil, a wide-ranging forest type in the boreal region. We based our analyses on a combination of destructive harvesting, consecutive mensuration, and optical measurements of canopy openness. After eight-year fertilization with a total of 70gNm^-2, ANPP was 27±7% higher in the fertilized (F) relative to the reference (R) stand, but although L increased relative to its pre-fertilization values, IC was not greater than in R. On the seventh year after the treatment initiation, the increase of ANPP was matched by the decrease of belowground NPP (78 vs. 92gCm^-2yr^-1; ~17% of NPP) and, given the similarity of IC, suggests that the main effect of N-fertilization was changed carbon partitioning rather than increased canopy photosynthesis. Annual NPPS increased linearly with growing season temperature (T) in both treatments, with an upward shift of 70.2gCm^-2yr^-1 by fertilization, which also caused greater amount of unexplained variation (r²=0.53 in R, 0.21 in F). Residuals of the NPPS-T relationship of F were related to growing season precipitation (P, r²=0.48), indicating that T constrains productivity at this site regardless of fertility, while P is important in determining productivity where N-limitation is alleviated. We estimated that, in a growing season average T (11.5±1.0°C; 33-year-mean), NPPS response to N-fertilization will be nullified with P 31mm less than the mean (325±85mm), and would double with P 109mm greater than the mean. These results suggest that inter-annual variation in climate, particularly in P, may help explaining the reported large variability in growth responses to fertilization of pine stands on sandy soils. Furthermore, forest management of long-rotation systems, such as those of boreal and northern temperate forests, must consider the efficiency of fertilization in terms of wood production in the context of changes in climate predicted for the region.