Delayed Multiattribute Product Differentiation

We develop a two-stage model for versioning products with respect to both vertical and horizontal attributes. At first, a firm positions its top-quality “flagship” product in a market with an imperfectly known distribution of tastes and reservation prices. In the second stage, the firm learns these consumer characteristics and has the option of extending its product line by versioning the flagship product using pure horizontal differentiation, quality degrading, or both. The firm's nonconvex versioning problem is solved analytically for the two-product case. We find that ex ante extending the product line through vertical differentiation is optimal for low marginal cost of quality (development cost); otherwise pure horizontal differentiation is superior. Given quasilinear consumer preferences and a uniform distribution of consumer characteristics, versioning with respect to both horizontal and vertical attributes is never optimal. Under delayed differentiation the optimal policy is contingent on the observed demand realization and may lead to horizontal cannibalization and price dispersion for equal-quality products. The firm tends to increase its investment in product quality unless it adopts a state-contingent policy of horizontal versioning for high and vertical versioning for low demand realizations. Following a state-contingent policy, the optimal upfront development effort may be significantly lower than under full ex-ante commitment. The option value of delayed differentiation is generally nonmonotonic in the firm's development cost

The Endogenous Value of Information”

This doctoral thesis examines the value of information in settings, where two or more agents interact. In such situations, contrary to one-person decision problems, a more informative signal is not necessarily more valuable, and it may be profit-maximizing for an information seller to deliberately garble or damage his signal before selling it to another agent. More generally, the value of information depends on the precise contractual arrangement under which the information is to be transferred and used. I examine the following applications: (i) value of information in portfolio decision problems; and (ii) the transfer of information to a wealth-constrained investor. In a multiagent setting I examine (iii) the value of hared information services; and (iv) the value of information and flexibility for screening a heterogeneous consumer base

New consumer durable brand choice : modeling multiattributeutility, risk, and dyanmics

"The Marketing Center."Bibliography: p.41-44.by John H. Roberts and Glen L. Urban

First Mover Advantage: An Industrial Buyer Behavioral Perspective

Contemporary order-of-entry research has shifted from econometric investigations to research grounded in quasi-experimental and empirical consumer behavior studies. In the marketing literature, Carpenter and Nakamoto (1988), Kardes and Kalyanaram (1992), and particularly Alpert and Kamins (1992, 1994, 1995) have examined the role of consumer behavior as a potential explanation of first mover advantage. However, little or no research has been devoted to an understanding of pioneer advantage as it relates to industrial markets. This dissertation investigated the effect of order of entry on the attitudes of industrial purchasing managers. Six major hypotheses were proposed to examine the cognitive beliefs, attitudes, and purchasing intentions of industrial purchasing managers as they relate to order of entry. Specifically, this line of inquiry examined the global and multiattribute attitudes of industrial purchasing managers toward three categories of entry: pioneers, early followers, and late entrants. In addition, the research strategy of this study included a measure of global attitudinal preference under ceteris paribus conditions. The research setting for this study consisted of National Association of Purchasing Management members representing strategic business units from Standard Industrial Classifications 35, 36, 37, and 38. The results of this study were based upon a multivariate statistical analysis of the survey responses of 231 industrial purchasing managers. The findings of this study strongly suggest that industrial purchasing managers hold different attitudes toward potential suppliers based upon their entry order. In contrast to previous research in consumer goods settings, industrial purchasing managers were found to extend an attitudinal preference to early followers over pioneers. This attitudinal preference was substantial, statistically significant, and consistent. Survey respondents were also found to associate different subjective attributes with different order-of-entry categories, creating potential trade-offs in the purchasing decision. Pioneer suppliers were perceived to be more technologically sophisticated and more likely to enhance the competitive advantage of the purchasing firm\u27s products. However, survey respondents expressed concerns regarding pioneer quality, reliability, and expense—all factors associated with perceived risk. When these concerns were mitigated, industrial purchasing managers were found to prefer pioneer products

The Role of the Mangement Sciences in Research on Personalization

We present a review of research studies that deal with personalization. We synthesize current knowledge about these areas, and identify issues that we envision will be of interest to researchers working in the management sciences. We take an interdisciplinary approach that spans the areas of economics, marketing, information technology, and operations. We present an overarching framework for personalization that allows us to identify key players in the personalization process, as well as, the key stages of personalization. The framework enables us to examine the strategic role of personalization in the interactions between a firm and other key players in the firm's value system. We review extant literature in the strategic behavior of firms, and discuss opportunities for analytical and empirical research in this regard. Next, we examine how a firm can learn a customer's preferences, which is one of the key components of the personalization process. We use a utility-based approach to formalize such preference functions, and to understand how these preference functions could be learnt based on a customer's interactions with a firm. We identify well-established techniques in management sciences that can be gainfully employed in future research on personalization.CRM, Persoanlization, Marketing, e-commerce,

Social network externalities and price dispersion in online markets.

Ample empirical studies in the e-commerce literature have documented that the price dispersion in online markets is 1) as large as that in offline markets, 2) persistent across time, and 3) only partially explained by observed eretailers’ attributes. Buying on the internet market is risky to consumers. First of all, consumers and the products they purchase are separated in time. There is a delay in time between the time consumers pay and the time they receive the orders. Second, consumers and the products they purchase are separated in space. Consumers cannot physically touch or examine the products at the point of purchase. As such, online markets involve an adoption process based on the interaction of consumers’ experiences in the form of references, recommendations, word of mouth, etc. The social network externalities introduced by the interaction of consumer’s experiences reduces the risk of seller choice and allows some sellers to charge higher prices for even homogeneous products. This research aims to study online market price dispersion from the social network externalities perspective. Our model posits that consumers are risk averse and assess the risk of having a satisfactory transaction from a seller based on the two dimensions of the seller’s social network externalities: quantity externality (i.e., the size of the seller’s social network) and quality externality (i.e., the satisfactory transaction probability of the seller’s social network). We further investigate the moderating effect of product value for consumers on the impact of social network externality on online market price dispersion. Our model yields several important propositions which we empirically test using data sets collected from eBay. We found that 1) both quantity externality and quality externality of social network are salient in driving online price dispersion, and 2) the salience of social network externality is stronger for purchase behavior in higher value product categories.network externalities, price dispersion, online markets, word of mouth

Individual-Level Determinants of the Propensity to Shirk

Employee shirking, where workers give less than full effort on the job, has typically been investigated as a construct subject to group and organization-level influences. Neglected are individual differences that might explain why individuals in the same organization or work-group might shirk. The present study sought to address these limitations by investigating subjective well-being (a dispositional construct), job satisfaction, as well as other individual-level determinants of shirking behavior. Results identified several individual-level determinants of shirking. Implications of the results are discussed

Why Do Commercial Firms Open The Source Code Of Their Products?

This paper is concerned with the economic trade-offs associated with open-sourcing, the business strategy of releasing the source code of a commercial software product. We model open-sourcing as a strategic option for firms that compete in the market for software products. At the core of our model is the effect of open-sourcing on customer values, as well as the relative ease of customizing the open-source products. We show that open-sourcing can arise as an equilibrium outcome in our two-stage game. If the enhancement of customer value from open-sourcing is moderate or high, in equilibrium firms may find it optimal to release the source code of their commercial software products even when this strategy may reduce their profits

Product Differentiation for Software-as-a-Service Providers

The market for the new provisioningtype Software-as-a-Service (SaaS) hasreached a significant size and still showsenormous growth rates. By varying sizeof SaaS products, providers can improvetheir market position and profitsby successfully acting in the tensionarea of customer acquisition, pricingand costs. We first elaborate differencesconcerning product differentiationbetween classic software provisioningmodels and SaaS. Then, we introducea micro-economic based decisionmodel to maximize the return of aprovider by finding an optimal granularity,i.e. by varying the size of services.This paper makes two contributions inthis context: (1) it provides a conceptualfoundation for product differentiationwithin the scope of SaaS and(2) it presents the first implementationof variable reproduction costs for webbased software offers. The model is illustratedby a real world case with datafrom a SaaS provider

The relationships between brand attributes and word of mouth on brand identity and brand image

Companies all around the world have to deal with issues relating to brand image development and maintenance because brand image can affect their brand performance. Based on the attribution theory, this research examined the impact of the components of brand attributes, namely brand relevance, brand consistency, brand sustainability, brand credibility, brand uniqueness and word of mouth (WOM) of brand image. This study also evaluated the mediating influence of brand WOM identity on the relationship between the brand attribute components, WOM and brand image. Insufficient empirical attention, particularly in relation to the attribution theory, was the driving force for the current study to be undertaken. Two hundred and fifty-four travellers via two airports located in the northern region of Malaysia participated in this study. A cross-sectional survey approach and the quota sampling technique were adopted to select the participants, and PLS algorithm and bootstrapping techniques were deployed to test the hypothesized relationships. The PLS path modelling reported significant results of the major hypotheses; brand sustainability was the only variable not significantly related to brand image. It was found that brand identity mediated significantly the relationship between brand attributes, WOM and brand image. Overall, the results provide support for the attribution theory in that brand attributes, namely brand relevance, brand consistency, brand sustainability, brand credibility, brand uniqueness and word of mouth can help shape consumers' perceptions which ultimately result in harnessing brand image. Finally, the study's implications for theory and practice, limitations, conclusions as well as directions for future research are provided and discussed