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An Exploratory Study of Trade Show Formation and Diversity

Jianan Wu a; Gary L. Lilien b; Aniruddha Dasgupta c a E. J. Ourso College of Business, Louisiana State University, Baton Rouge, LA b Smeal College of Business, The Pennsylvania State University, University Park, PA c Massachusetts Maritime Academy, Buzzards Bay, MA

To cite this Article Wu, Jianan, Lilien, Gary L. and Dasgupta, Aniruddha(2008) 'An Exploratory Study of Trade Show

Formation and Diversity', Journal of Business To Business Marketing, 15: 4, 397 424 To link to this Article: DOI: 10.1080/15470620802325617 URL: http://dx.doi.org/10.1080/15470620802325617

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1547-0628 1051-712X WBBM Journal of Business-to-Business Marketing, Marketing Vol. 15, No. 4, October 2008: pp. 140

An Exploratory Study of Trade Show Formation and Diversity

Jianan Wu Gary L. Lilien Aniruddha Dasgupta

Wu, Lilien, OF JOURNAL and BUSINESS-TO-BUSINESS Dasgupta MARKETING

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ABSTRACT. Purpose: To analyze the objectives of trade show participants and to link those objectives to trade show formation and diversity. Methodology/Approach: We conduct an exploratory analysis of trade show formation and diversity and link them to the differences in several seller and buyer interests across industries. We used data collected from a single large trade show to examine the nature of buyer and seller participation goals using multivariate statistical analysis. We then used a data set collected from the entire trade show industry to examine the trade show diversity via an econometric model. Findings: We find that higher selling and buying propensity is linked to more vertical shows whereas higher breadth of product interests is linked

Jianan Wu is associate professor of marketing at the E. J. Ourso College of Business, Louisiana State University, Baton Rouge, LA (E-mail: jiananwu@lsu.edu). Gary L. Lilien is distinguished research professor of management science at Smeal College of Business, The Pennsylvania State University, University Park, PA (E-mail: GLilien@psu.edu). Aniruddha Dasgupta is associate professor of international maritime business at the Massachusetts Maritime Academy, Buzzards Bay, MA (E-mail: adasgupta@maritime.edu). We gratefully acknowledge financial support from the Institute for the Studies of Business Markets (ISBM) of Penn State University. We thank Hans Baumgartner, Kalyan Chatterjee, Srinath Gopalakrishna, and Arvind Rangaswamy for many useful comments on an earlier version of this paper and Exhibit Surveys, Inc. for providing the data used in the empirical study. Address correspondence to: Jianan Wu, E. J. Ourso College of Business, Louisiana State University, Baton Rouge, LA 70803 (E-mail: jiananwu@lsu.edu). Journal of Business-to-Business Marketing, Vol. 15(4) 2008 2008 by The Haworth Press. All rights reserved. doi:10.1080/15470620802325617

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to more horizontal shows. We also find that a highly innovative industry is often linked to more horizontal shows. Originality/Value/Contribution: Although trade shows are critical elements of the communications mix in business-to-business marketing, very little is known about how a trade show is formed and why two different types of shows (i.e., horizontal and vertical) coexist in the industry. This is the first study that investigates these issues. Our work should help guide trade show organizers diagnose and improve the appropriate mix of shows in a given industry and help trade show participants select better shows to attend, depending on their show objectives and selling/buying interests.
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KEYWORDS. Trade show, business marketing

Trade shows or industrial exhibitions constitute an important element of the communication mix in the business marketplace. In terms of expenditure allocations, they make up the third largest component of the marketing communication mix behind direct marketing and business magazine advertising (Pinar, Rogers, and Baack 2002). In the United States alone, the trade show industry annually hosts over 12,000 shows, involves over two million exhibitors and over 100 million attendees (CEIR 2001), and generates over 50 billion U.S. dollars (Marken 2004). While the industry has seen some consolidation in recent years, growth in interest and participation remains high (Donberg 2006; The Industrial Robot 2006). The widespread prevalence of this form of market/meeting place in the United States seems representative of the world at large. For instance, Hansen (1996) reports that there were 169 international shows held in Germany with 124,000 exhibitors and over 10 million attendees, as well as 220 international shows organized in the UK with 61,000 exhibitors and 4.6 million attendees. In business markets, two types of trade shows are formed based on market coverage: vertical shows and horizontal shows (Gopalakrishna and Lilien 1994). The nature of the show audience in terms of product interest, buying/selling plans, the time horizon of strategic consideration, and so on, can differ greatly by type of show. Typically, a vertical show involves a narrow range of products and attracts visitors specifically interested in those products. In contrast, a horizontal show usually involves a much broader range of products and a more diverse audience. For example, attendees at the Association of Operating Room Nurses show, a vertical show, are almost all operating room nurses, and exhibitors display products

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that are used almost exclusively in the operating room. A typical horizontal show is the National Design Engineering Show, in which firms demonstrate products ranging from mechanical components, electrical and electronic components, plastics, elastomers, to CAD/CAM systems (Gopalakrishna and Williams 1992). It seems curious that vertical and horizontal shows coexist in many industries and that the proportion of horizontal shows formed varies widely across industries. Table 1 details the number and proportion of vertical shows and horizontal shows for different industries in a sevenyear span (19851991). There appears to be no simple pattern here: why are 319 of the 322 shows in the communications industry vertical, 61 of the 64 shows in the food processing and distribution industry horizontal while the chemical industry splits almost evenly with 20 vertical and 23 horizontal shows? Even the status of existing shows evolve, with some merging and becoming more horizontal and others splitting into more narrow shows. For instance, Conexpo-Con/Agg 96, the largest U.S. trade show in the construction industry, resulted from a merger of Conexpo (owned by the Construction Industry Manufacturers Association), the largest construction show, and Con/Agg (owned by the National Aggregates Association and the National Ready Mixed Concrete Association), one of the premier vertical shows specializing in concrete and aggregates in the United States. The new horizontal show attracted more than 1,250 exhibitors and 100,000 attendees, and covered 1.25 million square feet of exhibiting area, making it bigger than the last Conexpo and Con/Agg combined (Show Daily of Conexpo and Con/Agg, 96, 18). On the other hand, Comdex, the largest (horizontal) computer show in the United States, has seen threats by key exhibitors to split and form more narrowly focused shows (Calton 1994, A1). The consolidation and separation of trade shows is often strategic. For example, in 2005 the merge of Waste Expo and Wastecon continued to make news in the waste industry. Yet the two shows remain separate entities (Johnson 2005). This diversity and structural evolution of show type has seen little or no academic attention to date. Most trade show studies emphasize saleslead generation for exhibitors as the key goal, providing little rationale for the formation of horizontal shows (Gopalakrishna and Williams 1992; Gopalakrishna and Lilien, 1994; Dekimpe et al. 1997). These empirical studies assume that lead generation is a dominant objective for exhibitors and measure the performance of the show by how efficiently trade shows generate such leads. That performance measure suggests that because

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TABLE 1. The distribution of trade show types for top 21 industries (19851991)
Industry Number of Vertical Shows 379 319 3 90 80 3 52 49 48 3 20 0 32 0 15 0 6 21 17 0 15 1,152 441 0 0 44 23 33 1 30 10 24 15 0 0 15 0 49 48 47 43 33 33 30 25 24 21 21 17 15 15 1,593 93 4 0 61 7 96 94 80 64 59 78 3 457 322 Number of Horizontal Shows Total Number of Shows Proportion of Horizontal Shows 17% 1% 97% 4% 0% 95% 12% 0% 0% 94% 53% 100% 3% 100% 40% 100% 71% 0% 0% 100% 0% 28%

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Frequency

Over 100 shows

Computers and computer applications Communications

50100 shows

Engineering Medical and health care Housing Food processing and distribution Electrical and electronics

1550 shows

Paint Nursing Automotive and trucking Chemical Plastics Radio, TV, and cable Energy Building and construction Restaurants and food service Manufacturing Photographic Welding Packaging Education

Total

Source: Exhibit Surveys Inc. The industry classification used here are in keeping with the Trade Show Bureaus own classification scheme. Industries with fewer than 15 trade shows have been omitted from this table because of the instability of the proportions when the total number of shows in the industry is that low.

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vertical shows outperform horizontal shows in terms of selling efficiency, there should be little economic rationale for the formation of horizontal shows. Research to date has not studied why the proportion of show types vary across industries, which is the key question we explore here. To seek a coherent answer to this question requires an investigation of the actors and factors involved in the trade show formation process. Our exploratory analysis suggests that trade show participants selling/ buying propensity and breadth of product interests are closely correlated with the type of trade show formed: the higher the selling/buying propensity the more vertical shows we observe whereas the higher the breadth of product interests the more horizontal shows. Our analysis provides a mechanism to identify those product or market areas that appear either underserved or overserved by one or another type of show. We proceed as follows. In the next section we identify some important variables that theory and logic suggest should be linked to the diversity of trade shows across industries. Next we use data collected from a leading trade show research firm to empirically investigate our propositions. We conclude by discussing the theoretical and managerial implications of our results and the potential for future research in this area.

CORRELATES OF TRADE SHOW DIVERSITY

In this section we identify the variables that are most likely to correlate with the formation and type of trade shows. We focus on two sets of correlates: (1) trade showspecific correlates on Selling/Buying Propensity and Breadth of Product Interests, and (2) an important industry-specific correlateTechnology Innovativeness.

Trade ShowSpecific Correlates

Most of the research on trade show focuses on understanding the characteristics within a show or trade showspecific determinants. Some research (Gopalakrishna and Williams 1992; Gopalakrishna and Lilien 1994, 1995; Dekimpe et al. 1997) has focused on what might be called transactional goals (sales-lead generation, supplier selection, and the like) while other research (Borghini et al. 2006; Blythe 2000; Sharland and Balogh 1996; and Shoham 1999) has also looked at nontransactional goals (e.g., intelligence gathering and general awareness generation). If we call the ratio of the importance of transactional to nontransactional goals buying or selling

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propensity (for attendees and exhibitors respectively), we should expect these ratios to vary from industry to industry. And in some industries such as energy that rely on numerous technologies and see broad applications, participants may be interested in a broad range of products while in others (e.g., paint) those interests are likely to be much narrower. Variation in both these sets of participant goals may be expected to affect the type of trade shows that are formed.

Selling or Buying Propensity

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Exhibitors may have different selling propensities when exhibiting at a trade show. Kerin and Cron (1987) examined exhibitors performance using factor analysis and found two categories of roles that trade shows play in the exhibition industry: some exhibitors have objectives that are primarily sales oriented, such as generating leads, while others have nonsales-oriented objectives such as gathering competitive intelligence and enhancing company image. Following Kerin and Crons approach, Hansen (1999) proposed a two-dimensional framework on exhibitors trade show performance: an outcome-based dimension that includes the salesrelated activities, and a behavior-based dimension that includes nonsalesrelated activities, such as information-gathering activities, image-building activities, motivation activities, and relationship-building activities. Hansen (1999) also proposed a dual-motive theory in which selling and nonselling functions may exist not only for exhibitors but also for attendees. Using data collected from the seafood exporting industry of Norway, Hansen (1999) empirically demonstrated general support for his dual-motive theory. Consistent with Hansens (1999) findings, attendees have different buying propensities as well. The results from a Trade Show Bureau (1994) survey demonstrates that some attendees have immediate purchase needs while others may use trade shows to gather new product information that may be useful in guiding future purchases. Godar and OConnor (2001) find further support for this perspective, segmenting trade show attendees motives into two groups: short term (e.g., to make a buying decision or to confirm a prior decision) and long term (e.g., to reinforce contacts, develop contacts, and gather information for future purchase decisions). Exhibitors and attendees prioritize the importance of their information needs when attending a show, and should look for the best return on that information-exchange investment. Exhibitors with low selling propensity

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should seek to spread the word broadly; attendees with low buying propensity should seek the broadest base of information collection possible. Hence, situations with low selling/buying intensity by exhibitors or sellers should favor horizontal shows over vertical shows as efficient information exchange venues. Therefore, we have: Proposition 1. A lower selling or buying propensity for exhibitors or attendees will be positively correlated with the number of horizontal shows.
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Breadth of Product Interests

There are several reasons why exhibitors and attendees may have interests in different product categories, which we define as breadth of product interests. For example, small firms produce fewer products (as exhibitors) and are likely to need fewer products (as attendees). And some industries are linked to fewer other industries or technologies than others, leading to a lower breadth of product interest. The same reasoning holds for vertically organized firms, whose show participants are likely to represent a narrow set of interests. Industries characterized by vertical integration will see lower breadth of product interests while highly integrated industries should see a higher breadth of product interest (Williams et al. 1993). Although both exhibitors and attendees may demonstrate significant breadth of product interests, there may be differences between the two parties because the costs incurred by exhibitors (in dealing with multiple products) are much higher than those for attendees. In addition to the costs that attendees incur, exhibitors also incur space rental, booth setup, and entertainment costs. The more offerings exhibited, the more (expensive) show floor footage required, and exhibitors setup costs increase significantly as the number of products exhibited increases. Attendees see no such cost increases as their product interests broaden. If both exhibitors and attendees have a large breadth of product interests, a horizontal show should suit their needs better than a vertical show. This is analogous to a consumer going to a shopping mall or a department store versus a specialty shop. Therefore, we have: Proposition 2. A greater breadth of product interests for exhibitors or attendees will be positively correlated with the number of horizontal shows.

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Although it seems intuitive that the higher breadth of product interests by either exhibitor or attendee should make horizontal shows more appealing, the size and possible congestion at a large, heavily attended and diverse show can make such a show inefficient. Conexpo and Con/ Agg 96, a horizontal show formed by merging two vertical shows, illustrates this issue. In the merger decision a major issue for the Con/Agg team was their concern that exhibitors of specialized concrete and aggregates equipment might get lost in a large general construction forum. Robert A. Gale, representing the Con/Agg team, said, The decision on product concentration area was a key. That helped us [on the Con/Agg side] make the decision about 1999. We realized product concentration areas were essential . . . not just for concrete and aggregates suppliers but for many other product categories too (Show Daily of Conexpo and Con/ Agg, 96, 18). This inefficiency of horizontal shows can be critical when the disparity of breadth of product interests between exhibitors and attendees is high. To see the rationale, assume there are two products X and Y. Assume that while all attendees are interested in both products (i.e., a high breadth of product interest for attendees), some attendees (denoted by AX) are more interested in X while others (denoted by AY) are more interested in product Y. Assume also that the exhibitors have a narrow breadth of product interest, leading to a high degree of disparity of breadth of product interests between attendees and exhibitors. Suppose also that some exhibitors (denoted by EX) are only interested in exhibiting X while others (denoted by EY) are only interested in exhibiting Y. Other things being equal, it will be more efficient if EX (or EY) can identify AX (or AY) with less effort (e.g., saving valuable time at a trade show). In a horizontal show with both products X and Y, all EX, EY, AX, and AY will attend. In two vertical shows with products X and Y separated, EX and AX will attend one show while EY and AY will attend the other. Exhibitors (EX or EY) at the horizontal show must incur extra effort in screening out their marginal attendees (AY or AX), effort avoided in vertical shows through self-selection. This inefficiency leads to the separation of a horizontal show into one or more vertical shows where the scanning costs for exhibitors and attendees will be smaller. Therefore, we have: Proposition 3. A greater difference in breadth of product interests between exhibitors and attendees will be negatively correlated with the number of horizontal shows.

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Industry-Specific Correlates
We discussed trade show specific correlates in trade show formation. However, there are industry-specific correlates in trade show formation as well, a critical one being technological innovativeness.

Technological Innovativeness
One of the fundamental industry characteristics is technological innovativeness. The degree of technological innovativeness affects needs and wants of exhibitors and attendees. When the technology lifecycle is short, it is critical for all actors to stay abreast of the latest developments not only within the core industry but also in adjacent industries into which they can expand or from where future competitors may emerge (Zook and Allen 2001). A cross section of industries (see Table 1) will allow us to examine the effect of technological innovativeness. Specifically, for industries with higher levels of technological innovativeness (which we refer to as technological turbulence), more frequent and broader environmental scanning is necessary to stay abreast of current and future product developments. Therefore, we have: Proposition 4. Higher levels of industry technological innovativeness will be positively correlated with the number of horizontal shows. These ideas and our propositions are summarized graphically in Figure 1. (We discuss the possible effect of other industry-specific correlates further on in the discussion section.)

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EMPIRICAL ANALYSIS Data

We use data obtained from Exhibit Surveys, Inc., a leading research firm in the exhibition industry, and supplement it with two other data collection efforts described below. Our Propositions require data at the show-participant level (within show) and data at the show level across industries (cross show). We first conduct an empirical analysis on the objectives and product interests of trade show participants at a given show to establish the validity of the assumptions underlying our conceptual

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FIGURE 1. A conceptual framework showing the drivers of trade show formation and diversity.
Technological Innovativeness
Low
Technological Innovativeness

High

High

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Exhibitor Breadth of Product Interest

Low Low

Trade Show Formation, Diversity

Attendee Breadth of Product Interest

Low

Exhibitor Selling Propensity

Technological Innovativeness

High

Note: This figure suggests that two sets of parties, exhibitors and attendees, can vary in their trade show participation objectives along two sets of objective dimensions (i.e., breadth of product interest and buying and selling intensity) when influencing the formation of the type of trade show. The impact of that variation depends on industry structure (i.e., technology innovativeness).

framework. This analysis, while preliminary in nature, allows us to see if the conceptual constructs on selling/buying propensity and breadth of product interests are empirically supported and may also be used to support further theory development. We next test our Propositions on the drivers of trade show diversity derived from our conceptual framework.

Trade Show Participant Data

These data come from a single large show in the building and construction industry held in Las Vegas in 1996 with more than 100,000 attendees and more than 1,000 exhibitors. The data come from two sources: (1) questionnaire data collected via two mail surveys (17 Likert scale), one from a sample of exhibitors and the other from a sample of attendees; and (2) scanner-type data obtained from attendees when they have their electronic swipe card scanned at the booth they visited.

Technological Innovativeness

Attendee Buying Propensity

High

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FIGURE 2. Distribution of breadth of product interests for exhibitors and attendees

(A) Exhibitors (Sample size = 351, Mean = 1.23) 90% 80% 70% Percentage Percentage 60% 50% 40% 30% 20% 10% 0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

(B) Attendees (Sample size = 281, Mean = 5.79) 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Breadth of Product Interest 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Breadth of Product Interest

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(A) shows the distribution of number of product types exhibited by exhibitors within the 16 product types and (B) shows the number of product types of interest to attendees, indicating significant cross-product interests for both exhibitors and attendees at this show, but with the breadth of product interests for exhibitors smaller than those for attendees.

Cross Show Industry Data

These data also come from two sources. (1) the number of vertical shows and horizontal shows in the United States in a seven-year span (19851991). For purposes of data reliability, we retained only those industries that had at least 15 shows (i.e., at least two shows per year), resulting in 1,539 shows in 21 industries, which represents 91% of the trade shows in this time period (Figure 2). (2) the assessed breadth of product interest and selling/buying propensity (for both exhibitors and attendees in an industry), and technological innovativeness for each of the 21 industries in Figure 2. To generate these latter measures required that we obtain data from industry experts. We were able to identify and enlist the cooperation of two experts with broad cross-industry experience to assess breadth of product interest and selling/buying propensity for both exhibitors and attendees (using a 17 Likert scale). Using a Delphi-like procedure, the experts converged on the assessments found in Table 2 after two rounds. We also identified 17 well-known experts in new product development and technological innovation to assess, in each of the 21 industries, the degree of innovativeness, defined as the relative amount of new product development and new technical information that occurs per year within the industry (17 Likert scale).

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TABLE 2. Mean expert evaluations of various characteristics of both the trade shows and the associated industries noted in Table 1
Technological Innovativeness (Industry) (TECH) 6.58 6.32 5.00 5.08 2.66 3.11 5.58 2.26 2.37 3.26 3.71 3.82 3.53 2.61 2.53 2.45 3.79 4.26 2.32 3.03 2.76 3.67 1.33 4.05 1.51 4.29 1.09 3.45 1.25 6.00 5.00 2.00 5.00 5.00 2.50 3.00 6.00 3.00 2.00 3.50 3.00 6.00 3.00 3.00 2.00 3.00 6.00 5.00 5.00 6.00 6.00 6.00 3.00 4.00 4.50 4.00 5.00 3.00 5.00 3.00 4.00 4.00 4.00 3.00 5.00 2.00 5.00 5.00 6.00 4.50 4.00 3.00 2.00 6.00 2.00 2.50 4.50 2.00 2.00 2.00 4.00 3.50 4.50 2.00 5.00 5.00 4.50 4.00 2.50 3.00 4.50 4.00 Buying Interest (Attendee) (ATBUY) Selling Interest (Exhibitor) (ATSELL) Breadth of Product Interest (Attendee) (ATPROD) Breadth of Product Interest (Exhibitor) (EXPROD) 4.00 3.00 5.50 2.00 3.50 4.50 2.00 3.00 4.00 4.50 4.00 4.50 4.00 5.50 3.00 5.00 4.00 2.50 3.00 4.00 2.00 3.69 1.07

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Industry

Computers and computer applications Communications Engineering Medical and health care Housing Food processing and distribution Electrical and electronics Paint Nursing Automotive and trucking Chemical Plastics Radio, TV, and Cable Energy Building construction Restaurants and food service Manufacturing Photographic Welding Packaging Education

Mean SD

Note: Column 1 (TECH) is the mean from 17 expert evaluations while the other columns represent the consensus judgment after two rounds from our two trade show research experts.

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Correlates of Trade Show Formation Participants Objectives

In the exhibitor survey, exhibitors were asked to rate (on a 17 Likert scale) the importance they placed on 12 attendance objectives and how well the show performed on those objectives. Those objectives were: Number of leads Quality of leads Introducing new products Meeting current customers Selling at the show Generating awareness for specific products Delivering a specific message Improving company awareness/image Enhancing corporate morale Identifying new prospects Market testing new products Gathering competitive information

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We conducted an exploratory factor analysis for the exhibitors objectives and report the results in Table 3. Our results are largely consistent with previous studies (e.g., Kerin and Cron 1987). The factor analysis reveals a two-factor structure of the exhibitors objectives: selling factor and nonselling factor. Objectives such as Number of Leads, Quality of Leads, Introducing New Products, and Selling at the Show are more heavily loaded on the selling factor while objectives such as Improving Company Awareness/Images, Enhancing Corporate Morale, Identifying New Prospects, Market Testing New Products, and Gathering Competitive Information are more heavily loaded on the nonselling factor. The other three objectives are more evenly loaded on both factors. The twofactor model explains 52% of the total variance. In the attendee survey, attendees were asked which of the following reasons explained why they attended. See new products/developments Fact finding for future purchases Make a purchase Attend seminars/association meetings

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TABLE 3. Exploratory factor analysis of exhibitors objectives

Variable Factor Loadings Factor 1 Selling Number of leads Quality of leads Introducing new products Meeting current customers Selling at the show Generating awareness for specific products Delivering a specific message Improving company awareness/image Enhancing corporate morale Identifying new prospects Market testing new products Gathering competitive information Eigen value Cumulative variance explained 0.78 0.79 0.79 0.43 0.69 0.61 0.56 0.16 0.13 0.30 0.09 0.05 4.68 39.00% Factor 2 Nonselling 0.01 0.09 0.13 0.33 0.21 0.40 0.54 0.61 0.68 0.68 0.79 0.62 1.61 52.42%

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Note: The Eigen values of the factor analysis are 4.68, 1.61, 0.97, 0.84, 0.73, 0.65, 0.58, 0.45, 0.44, 0.37, 0.35, 0.29. The minimum Eigen value criterion suggests a two-factor pattern.

To see specific company(s)/product(s) To find products to represent Solve a problem Network with peers Obtain technical or product specifications

As these are binary (Yes-No) data, a standard approach is inapplicable. An appropriate approach is to assume that there is a latent continuous variable xi* and a threshold constant t (e.g., Bock and Lieberman 1970; Christofersson 1975; Muthen 1978) for each observed index xi , in which xi = 1 if and only xi* > t . Then, the latent factor analysis model can be written as x* = l F + e , which has the same mathematical form as the usual common factor analysis model, and e is assumed to have a multivariate normal distribution with mean zero. Because the latent variable x* is unobservable and the observed variable x is dichotomous, the estimated correlation matrix will be the tetrachoric correlation matrix. There are several estimators developed for this model. Bock and Lieberman (1970) used an MLE estimator and Christofersson (1975) and Muthen (1978) developed a GLS estimator. We use Christoferssons approach via PRELIS of LISREL and report the tetrachoric correlation matrix in Table 4a.

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TABLE 4. Exploratory factor analysis of attendees objectives

Variable Tetrachoric Correlations

a. The tetrachoric correlation matrix of attendees objectives See new products/developments 1.00 Fact finding for future purchases 0.19 1.00 Make a purchase 0.11 0.12 1.00 Attend seminars/association 0.16 0.19 0.22 1.00 meetings To see specific companies(s)/ 0.09 0.10 0.09 0.18 1.00 product(s) To find products to represent 0.06 0.10 0.11 0.10 0.24 1.00 Solve a problem 0.09 0.22 0.44 0.07 0.39 0.02 1.00 Network with peers 0.12 0.07 0.06 0.13 0.19 0.14 0.07 1.00 Obtain technical or product 0.33 0.03 0.11 0.05 0.30 0.03 0.21 0.17 1.00 specifications Variable Factor Loadings Factor 1 Buying Factor 2 Nonbuying

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b. The exploratory factor analysis based on the tetrachoric correlation matrix of attendees objectives See new products/developments 0.07 0.30 Fact finding for future purchases 0.41 0.20 Make a purchase 0.73 0.01 Attend seminars/association meetings 0.02 0.21 To see specific companie(s)/product(s) 0.40 0.68 To find products to represent 0.12 0.49 Solve a problem 0.84 0.15 Network with peers 0.20 0.73 Obtain technical or product specifications 0.11 0.33 Eigen value 2.02 1.47 Cumulative variance explained 22.40% 38.79 Note: The Eigen values of the factor analysis are 2.02, 1.47, 1.17, 1.10, 0.94, 0.85, 0.73, 0.47, 0.25. The minimum Eigen value criterion suggests a four-factor pattern but we retained a two-factor solution for better exposition.

Similarly, we conducted an explanatory factor analysis for attendees objectives. We use the tetrachoric correlation matrix as the input for the factor analysis and report the results in Table 4b. The factor pattern for attendees objectives is not as clear as that for exhibitors objectives. The minimum eigenvalue criterion would suggest a four-factor structure of our data. However, the third and fourth largest eigenvalues are 1.17 and

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1.10, very close to the traditional cut-off threshold of the minimum eigenvalue criterion. For ease of interpretation we retained a two-factor structure. Consistent with previous research (e.g., Kerin and Cron 1987), we find that these two factors are best described by Buying factor and Non-Buying factor. Objectives such as Fact Finding for Future Purchases, Make a Purchase, and Solve a Problem are more heavily loaded on the buying factor while objectives such as See New Products/Developments, Attend Seminars/Association Meetings, Network with Peers, and Obtain Technical or Product Specifications are more heavily loaded on the Non-Buying factor. Other objectives split across factors. The two-factor model explains 38.79% of the total variance.

Participants Product Interests

At the construction trade show, the products are classified into 16 types. Earthmoving equipment Compaction equipment Power equipment Paving equipment Lifting/hoisting equipment Concrete/asphalt plants Crushing/grinding/screening equipment Drilling equipment Trucking equipment Mixer Auxiliary equipment Parts Devices Concrete additives Computer hardware/software Others

In the exhibitors survey, respondents reported what product types they exhibit. In the attendees survey, respondents reported what role they play in the purchase of each product type, using the same product classification. We define breadth of product interests for an exhibitor or attendee as the number of product types in which the exhibitor or attendee shows interest. Figure 2 reports the distributions of breadth of product interests for both exhibitors and attendees. We find that the means (1.23 for exhibitors

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and 2.20 for attendees) of the breadth of product interests for both exhibitors and attendees are significantly greater than 1 (at p = 0.01), indicating significant cross product interest for both exhibitors and attendees.

Determinants of Trade Show Diversity

A simple, integrated way to investigate our Propositions regarding the correlates of trade show diversity is the binary logit model. Such a model would use the data from Table 2 to predict the likelihood that a show in one of the industries in Table 1 would be, say, horizontal. Note that from this perspective, the first row of Table 1 reports 379 vertical shows and 78 horizontal shows (totaling 457 in the industry) and the formation of those shows should be driven by the characteristics identified in the first row of Table 2. There characteristics are measured using a 7-point Likert scale (1 = Low and 7 = High) and are defined as follows. EXSELL: Exhibitors selling propensity ATBUY: Attendees buying propensity EXPROD: Exhibitors breadth of product interest ATPROD: Attendees breadth of product interest TECH: The industrial technology innovativeness DIFFPROD = |ATPROD EXPROD|: The disparity of the breadth of product interests between exhibitors and attendees

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The first column of Table 5 describes the results from running this model, with the observations being weighted by the total number of shows in the industry. As can be seen from the table, all variables are significant at 5% and beyond with the signs consistent with Propositions 14. The negative coefficients of EXSELL and ATBUY show that the lower the selling/buying propensity from exhibitors or attendees the higher the likelihood of horizontal shows to be formed, supporting Proposition 1. The positive coefficients of EXPROD and ATPROD show that the higher the breadth of product interests from exhibitors or attendees, the more likely horizontal shows are to be formed, supporting Proposition 2. The results on the disparity of breadth of product interests between exhibitors and attendees are interesting. First, the negative coefficient of DIFFPROD on horizontal shows in equation (2) suggests that the greater the difference in the breadth of product interest between exhibitors and attendees, the less likely horizontal shows are to be formed, directly supporting Proposition 3. Second, assuming other things being equal,

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TABLE 5. Results of simple logit, sequential two-stage and simultaneous equations models
Model Type Simple Logit Sequential Two-Stage Simultaneous Equations

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Coefficients for proportion of horizontal shows Constant 7.166*** (1.023) EXSELL 0.586** (0.238) ATBUY 0.283** (0.143) EXPROD 0.625*** (0.212) ATPROD 1.938*** (0.272) DIFFPROD 1.256*** (0.277) TECH 0.563*** (0.175) Residual Coefficients for total number of shows Constant EXSELL ATBUY EXPROD ATPROD DIFFPROD TECH Variance-Covariance of errors SIGMA1 SIGMA2 RHO Log Likelihoods 388.29

7.561*** (1.093) 0.624** (0.250) 0.255* (0.143) 0.682*** (0.217) 1.934*** (0.275) 1.110*** (0.282) 0.617** (0.192) 0.510 (0.341) 1.593 (1.284) 0.004 (.153) 0.047 (0.121) 0.329* (0.178) 0.275* (0.148) 0.274 (0.198) 0.537*** (0.115)

6.881*** (1.652) 1.188*** (0.380) 0.558** (0.261) 1.737*** (0.342) 1.906*** (0.397) 1.718*** (0.397) 0.570** (0.252)

1.593 (1.011) 0.004 (0.113) 0.047 (0.099) 0.329** (0.144) 0.275** (0.121) 0.274* (0.161) 0.537*** (0.274) 0.485*** (0.075) 4.033*** (0.926) 0.105** (0.052) 400.08

14.58 (stage 1) 387.21 (stage 2)

Note: Standard errors are in parenthesis. ***, **, and *denote significance at 1%, 5%, and 10%, respectively. Reported as general fit indices; not comparable across models.

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forming smaller vertical shows over a larger horizontal show would lead to an increase in the total number of shows organized when DIFFPROD is high. Our empirical analysis further supports this argument: the coefficient of DIFFPROD on total number of shows in equation (1) is positive and significant. Finally, the positive coefficient of TECH shows that the higher level of industry technology innovativeness, the more likely horizontal shows are to be formed, supporting Proposition 4.
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Robustness Checks
We took several steps to assess the robustness of these results. We calibrated standard OLS and probit models and found consistent results, with the logit model demonstrating both superior fit and predictive validity. However, a concern with the simple binary logit model is the exogenous treatment of the number of shows (n) as the weighting variable because the determinants of diversity may also affect n, which makes the number of shows endogenous and the estimates biased. To assess our Propositions more rigorously, we ran an OLS model on ln n (rather than on n as n is restricted to be nonnegative), took the residual as a control of the endogeneity of n, and used it as an additional explanatory variable in the logit model.1 The result of this two-stage model is reported in the second column of Table 5. The upper half of the column reports the logit coefficients. As before, all the determinants turn out to be significant and are consistent with our Propositions. A problem with the two-stage estimation procedure is that while such a procedure produces consistent estimates, those estimates are not efficient in general, compromising our confidence in the significance of the estimates. Estimation efficiency may not change the signs of the estimates, but does change the significances, which consequently changes the supports of our Propositions. The most rigorous way to assess our Propositions involves estimating the nonlinear simultaneous equation system jointly using an MLE

ln ni = Xi g + ui ni ~ Binomial (ni , F ( Xi b + vi ))
h

(1) (2)

where Xi are the exogenous determinants of trade show formation (i.e., Constant, EXSELL, ATBUY, EXPROD, ATPROD, DIFFPROD,

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TECH), F (.) is the logistic cdf,2 (ui, vi ) represent error terms that are

0 s2 rs1s 2 u jointly normally distributed as i ~ Normal , 1 , 2 vi s2 rs1s 2 0 and ni and nih represent the total number of shows and the number of
horizontal shows in industry i. This approach,3 although methodologically more complex, provides a more rigorous test of our Propositions. The results from this simultaneous two-equation estimation approach are described in the third column of Table 5. These results are consistent with those we obtained from the sequential two-stage estimation. The coefficients determining the log of n (reported in the middle of the column) coincide with those obtained in the two-stage model4. The correlation coefficient (reported along with the standard deviations of the error terms at the bottom part of the column) is negative and also significant at 5%. More importantly, the beta coefficients (reported on the top part of the column) are significant at 5% and beyond, and appear with signs that support our Propositions. In summary, all three approaches support our Propositions on the correlates of trade show diversity. Notice that the error correlation between the number of shows and the diversity of shows is significant (at 0.05), suggesting the need for a simultaneous approach to testing our Propositions. That correlation also shows that several of the drivers we have identified that affect show diversitybreadth of product interest for exhibitors and attendees and technological innovativeness of the industryappear to affect the number of shows in an industry as well.

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DISCUSSION AND CONCLUSIONS

We have studied the diversity of trade show types across industries and have found that horizontal shows are more likely to be formed if (1) participants have lower selling/buying propensity and/or higher breadth of product interest (short-term oriented) or (2) if the industry is more innovative in technology (long-term oriented). We also found that these key drivers are closely related to the number of shows formed in an industry. This exploratory, empirical examination of trade show formation should help researchers better conceptualize and develop coherent theories on trade shows, an important need in trade show research. The lack of theory in this area has produced empirical results to date that are hard to

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reconcile; empirical explorations on the correlates of trade show diversity should help shed light on understanding those results in particular and on the trade show generation process in general.

Managerial Implications
One implication of our research is that it provides a framework to predict trade show diversity based upon an understanding of the level and the congruence between exhibitor and attendee objectives and breadth of product interests. To illustrate the managerial implications of that framework, we use the simultaneous equation model with a jackknife approach: for each industry we used the data from the other 20 industries as the calibration sample and predicted the proportion of horizontal shows for the single hold-out industry. The residual is the difference between the empirical proportion of horizontal shows in that industry and the predicted proportion, based on the estimated coefficients of the model from the calibration sample. Table 6 gives the results (along with full samplefitted values and residuals). From a managerial perspective, it appears that the packaging and the building and construction industries may be overserved by horizontal shows (large positive residuals) while the photographic industry appears to be underserved by those types of shows (large negative residuals).5 Thus there may be opportunities for organizers in these industries to profitably redefine the focus of some of the shows there. Hence our framework, which links trade show participants objectives and industry characteristics to the diversity of trade shows, has clear managerial uses: it can help trade show organizers diagnose and improve the appropriate mix of shows in a given industry and help trade show participants select better shows to attend, depending on their show objectives and buying/selling interests.

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Limitations and Future Research

Our research has been exploratory; it suggests some possible theoretical results that should be assessed more rigorously with broader and deeper data sets. Our explorations relied on expert judgments for several of the variables. While our use of multiple estimation models and our jackknife analysis suggests that our results are relatively robust; replications with other experts and perhaps triangulation with more objective data would be desirable. Our simultaneous model estimates showed that the total number and types of trade shows formed in an industry is related to two trade show

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Actual Horizontal Show Proportion Estimated Horizontal Show Proportion 17.00% 1.00% 97.00% 4.00% 0.00% 95.00% 12.00% 0.00% 0.00% 94.00% 53.00% 100.00% 3.00% 100.00% 40.00% 100.00% 71.00% 0.00% 0.00% 100.00% 0.00% 23.62% 7.87% 99.48% 15.05% 12.08% 84.31% 20.46% 9.30% 9.67% 86.17% 62.40% 89.40% 13.98% 95.76% 32.42% 95.70% 74.01% 17.95% 14.70% 65.86% 10.06% 6.55% 6.94% 2.60% 10.80% 12.08% 11.00% 8.60% 9.30% 9.67% 7.45% 8.91% 10.60% 10.95% 4.24% 7.58% 4.30% 2.58% 17.95% 14.70% 34.14% 10.06% 10.05% 23.71% 7.84% 100.00% 19.29% 12.32% 82.98% 16.77% 9.63% 10.47% 87.29% 59.12% 89.41% 15.61% 95.74% 5.06% 95.68% 82.08% 18.57% 15.45% 64.72% 10.35% Residual Estimated Horizontal Show Proportion Full Sample Jackknife

TABLE 6. Predictive validity analysis of the simultaneous equation model

Industry

Residual

Computers and computer applications Communications Engineering Medical and health care Housing Food processing and distribution Electrical and electronics Paint Nursing Automotive and trucking Chemicals Plastics Radio, TV, and cable Energy Building and construction Restaurants and food services Manufacturing Photographic Welding Packaging Education Unweighted MAD

6.64% 6.91% 3.12% 15.03% 12.32% 12.34% 4.91% 9.63% 10.47% 6.33% 5.63% 10.59% 12.58% 4.26% 34.94% 4.32% 10.66% 18.57% 15.45% 35.28% 10.35% 11.92%

MAD = Mean absolute deviation.

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specific correlates: breadth of product interestby attendees and exhibitors and an industry-specific correlateand the technological innovativeness of an industry. A more complete theory of trade show formation will require the identification of economic and other drivers beyond those identified here, such as other industry-specific correlates including industry competitiveness, concentration, product profitability, growth rate, and product life-cycle stage. Trade shows remain an important and understudied element of the communications mix, demanding more research to better understand how they can best be used and how to better assess their effectiveness. We hope research such as this and the research directions noted above will add to our understanding and improve our use of this important marketing communications vehicle.

NOTES
1. We also tried using a count data model to explain n instead of running an OLS model (with ln n as the left hand side variable). Both Poisson and negative binomial regression models score much worse in terms of log likelihoods (the values are 113.98 and 94.94 as opposed to 14.58 for the OLS model) and hence, AIC. Because of this finding and also because of the difficulty of extending such a model to the two-stage approach outlined next, we followed the simple OLS approach. 2. We used the cdf for the normal distribution in estimation and prediction as well and found that the cdf of the logistic distribution has better goodness-of-fit statistics and performs better on tests of holdout predictive validity. 3. See the Appendix for the model estimation procedure. 4. This is not a surprising result. OLS coefficient estimates and MLE estimates are identical for linear regression models with normally distributed errors. A close look at equation (3) in the Appendix reveals that the stage one likelihood value dominates the joint likelihood value, ensuring close coefficient estimates for stage-one for both the sequential 2-stage model and the simultaneous model. 5. From Table 6 we note that, from a predictive validity perspective, our model does quite well. More than half our sample comes from the first two categories, yet our prediction error for computers is 6.64% while it is 6.91% for communications. These compare to an average mean absolute deviation (MAD) of 11.92% for the sample as a whole (on an unweighted basis). Apart from one industry, building and construction, the full sample and jackknife predictions correspond quite well, which makes that industry a possible candidate for an outlier. (Indeed, we reran the simultaneous equation analysis after deleting this industry and found a substantial effect on our assessment of our Propositions). The outcome of the jackknife procedure demonstrates the robustness of these results, as those industries that feature disproportionately large numbers of shows do not determine the results obtained.

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REFERENCES
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Pinar, M., J. D. Rogers, and D. Baack (2002). An examination of trade show participation in a developing country: An exploratory study in Turkey. Journal of Euromarketing 11(3):3352. Sharland, A. and P. Balogh (1996). The value of non-selling activities at international trade shows. Industrial Marketing Management 25:4956. Shoham, A. (1999). Performance in trade shows and exhibitions: A synthesis and directions for future research. Journal of Global Marketing 12(3):4157. Show Daily of Conexpo and Con/Agg, 96 (1996). Program of the Conexpo and Con/Agg 96 trade show. Trade Show Bureau (1994). A guide to the US exposition industry. Denver, CO: Trade Show Bureau Resource Center. Williams, J. D., S. Gopalakrishna, and J. M. Cox (1993). Trade show guidelines for smaller firms. Industrial Marketing Management 22:265275. Zook, C. and J. Allen (2001). Profit from the core: Growth strategy in an era of turbulence. Boston: Harvard Business School Press.

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APPENDIX: ESTIMATION APPROACH FOR SIMULTANEOUS MODEL

s 2 Because vi | ui ~ N r 2 ui , s 2 (1 r 2 ) , the log-likelihood function for s1 our simultaneous model equations (1) and (2) is

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LL(b, g, ) = Contant +
+ ln

21

i =1

1 ln ni Xi g ln F s1 s1
nh

( F ( Xi b + v)) i

(1 F ( Xi b + v))

v ni

v r s2 (ln n X g ) i i 1 s dv 1 F 2 2 s2 1r s2 1r

(3)

where f denotes the standard normal density function. Because the integral above does not admit a closed-form solution, we calculate it using numerical integration (via Gauss quadrature). Our estimates are obtained by maximizing equation (3) using Newton-Raphson algorithm.

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IMPLICATIONS FOR BUSINESS MARKETING PRACTICE

Trade shows represent a major element of the communication mix in business-to-business marketing: they make up the third largest component of the marketing commutation mix behind direct marketing and business magazine advertising. In the United States alone, the trade show industry annually hosts over 12,000 shows, involves over two million exhibitors and over 100 million attendees, and generates over $50 billion. Yet, very little is known on how a trade show is formed and why two different types of shows (i.e., horizontal and vertical) coexist in the exhibition industry. For example, some industries are dominated by horizontal shows (e.g., engineering, food processing and distribution, etc.) while some are dominated by vertical shows (e.g., medical and health care, housing, etc.). This article is the first to investigate the key issues in trade show formation and diversity. It can help trade show organizers diagnose and improve the appropriate mix of shows in a given industry. It helps trade show participants select better shows to attend, depending on their show objectives and selling or buying interests. We analyzed the trade show industry within industry (trade show specific factors) and across industry (industry-specific factors). Within industry, we find that both exhibitors and attendees of trade shows vary in their objectives. Exhibitors may seek immediate sales at the show or seek to fulfill nonsales objectives such as obtaining competitive marketing intelligence or both. On the other hand, attendees may seek to fulfill immediate buying needs or nonbuying objectives such as new product information. We find that for a market with higher selling or buying propensity, vertical shows are more prevalent while for a market with a higher breadth of product interests, horizontal shows are likely to be more prevalent. In addition, we find that a highly innovative industry has more horizontal shows. This article provides a methodology to analyze the nature of the objectives of trade show participants and the linkage on how these objectives are related to trade show formation and diversity. For example, the jackknife approach illustrated in this article provides a framework to predict trade show diversity based on an understanding of selling or buying propensity levels and matches and likewise for breadth of product interests. For a given industry, this approach can forecast whether the industry has the most appropriate balance of vertical or horizontal shows, providing guidelines for show organizers on what types of shows to organize.

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Trade show participants (exhibitors and attendees) can use these results to determine, given their goals (breadth of product interest and buying or selling intensity), which are the most appropriate shows to attend. And show organizers, as noted previously, can use our results to identify industries that are underserved by one show type or another and uncover potentially lucrative business opportunities Although the nature of our study is exploratory, our framework offers an initial step in building up a theory of trade show formation and diversity that will ultimately benefit all participants in the exhibition industry.
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