Marketing inputs and outcome heterogeneity: Using a quantile regression framework in the entertainment industry

Abstract

The success of entertainment products such as movies or books varies tremendously, and managers strive to increase the odds by deciding on the right marketing input. Aiming to improve managerial decision making, we suggest and test a quantile regression framework to detect outcome heterogeneity effects of marketing inputs in the entertainment industry. By analyzing the spread of the .9 and the .1 conditioned quantile to the .5 (median) conditioned quantile, we study how much an increase (decrease) of an input factor (star power and quality) changes the spread of the expected outcome (revenues and sales). The spread serves as an indicator for the heterogeneity effect of the input factor regarding the outcome. In two empirical studies, we show how marketing instruments increase (or decrease) outcome heterogeneity by estimating quantile regressions and provide generalizable findings regarding the outcome heterogeneity effects of star power (increases outcome heterogeneity) and quality evaluations (reduces outcome heterogeneity) in the entertainment industry.