Empirical Studies In Online Retail Operations And Dynamic Pricing

This dissertation studies empirical problems in retail operations management and dynamic pricing through three essays. The first essay studies the financial impact of offering faster delivery in online retail. Using econometric policy analysis framework, we study a quasi-experimental setting in which a group of U.S. customers for a large apparel retailer experienced a reduction in delivery time due to the opening of a new distribution center (DC). We show that faster delivery increased sales growth by 0.58% per week following the opening of the new DC, with the effect varying inversely with respect to distance from the new DC. The second essay studies the design of free shipping threshold policy in online retail using transaction data from a major online apparel retailer. We develop models of customer demand and product return behavior that are consistent with empirical data to determine the optimal level of free shipping threshold. In particular, we incorporate a behavior called order padding, in which customers deliberately inflate their orders to qualify for free shipping, and its effect on product return. We analyze the model to show that a free shipping threshold policy is most effective when the retailer faces high product margin, low shipping revenue, low product return probability, and when order padding does not cause customers to delay future purchase. The third essay studies practical issues in large-scale multiproduct dynamic pricing. We partner with a Major League Baseball (MLB) franchise to develop a demand model for its single-game tickets. The demand model is then used to evaluate the effectiveness of dynamic pricing policies. The demand model indicates that due to various practical constraints in pricing, the franchise was unable to benefit from the use of dynamic pricing. We address these issues and use simulation to show that revenue improvement of up to 15% can be achieved through the effective use of dynamic pricing. We also show that a properly calibrated fixed pricing policy based on a detailed demand model can achieve similar levels of revenue improvement as the optimal dynamic pricing policy

An Exploration of Ticket Pricing in Intercollegiate Athletics

Ticket sales represent a significant revenue stream for FBS athletic departments, yet little is known about how administrators determine prices for those tickets. This three-paper format dissertation is an attempt to begin filling this gap in the literature so that we may better understand ticket pricing from a managerial perspective. Paper one is conceptual in nature, and includes a review of extant ticket pricing literature and presents a research agenda for studying pricing in the unique environment of intercollegiate sport using the theoretical frameworks of stakeholder theory and institutional theory. The second and third papers are empirical examinations of ticket-pricing from the viewpoints of athletic administrators with various departmental responsibilities so that we may better understand the role of ticket pricing in intercollegiate sport from different points of departure. Using a phenomenological approach, twenty athletic administrators, representing two Power 5 and two Group of 5 institutions, were interviewed about their experiences with ticket pricing. Paper two represents an attempt to better understand the pricing process utilized in college sport, including the organizational objectives and influencing factors identified by administrators, while also suggesting a cyclical model for spectator sport ticket pricing. Paper three is an exploration of the perceived roles of athletic administrative stakeholders, as well as departmental isomorphic behavior, as they relate to ticket pricing decisions in intercollegiate athletics

Impact of Coronavirus Disease 2019 on Secondary Market Ticket Price, Attendance Demand, And Fan’s Willingness to Pay: National Football League (NFL)

This study explores how coronavirus disease 2019 (COVID-19) affected secondary market ticket prices, the number of attendees, and fans’ willingness to pay in the National Football League (NFL). The COVID-19 pandemic has significantly impacted the sport industry, affecting everything from the scheduling and delivery of games to the financial health of teams, leagues, and related businesses. One of the most visible impacts of the pandemic has been the suspension, delay, and cancellation of many sporting events, including entire seasons of some professional sport leagues. Sporting events require large gatherings of people in close proximity, which is precisely the opposite of what is needed to control the spread of the virus. The pandemic has also led to the closure of sports venues, training facilities, and other sports-related businesses, leading to significant financial losses. In addition to the postponement or cancellation of events, the pandemic has also affected how sporting events were disclosed to fans. Many events were held without fans in attendance or with limited-capacity crowds. Therefore, amid disease threats, examining the secondary ticket market, attendance demand, and willingness to pay is important: fan demand and willingness to pay concerning updated marketing and ticket pricing policies can influence revenue generation in sport. Two types of data observations were collected for this study: primary and secondary. Specifically, secondary market ticket prices and the number of attendees for each game were collected during NFL 2022 season to investigate the impact of COVID-19 health risks on ticket prices and attendance demand. Also, the survey was designed to understand NFL fans’ willingness to pay for tickets amid the pandemic. A multilevel regression model analysis was adopted due to the nested structure of the data, involving secondary data such as ticket prices and the number of attendees. Also, structural equation modeling analysis was utilized to investigate NFL fans’ willingness to pay. The results show that when secondary market sellers’ ticket prices significantly reflected COVID-19 deaths, NFL fans considered COVID-19 cases whether they attended a game or not. Also, team performance predictors are a significant consideration for price and attendance demand determinations. Although the risk attitude of COVID-19 directly explained fans’ willingness to pay (WTP) for additional safety in the stadium, willingness to pay for a ticket does not have a significant relationship with willingness to pay for higher safety measures. However, WTP was significantly related to past spending on NFL game tickets. Overall, this study found that COVID-19 health risks (i.e., COVID-19 cases and deaths) explain ticket prices in the secondary market and the number of attendees in the NFL. Also, the results uncovered fans’ willingness to pay for higher safety services amid the pandemic that is related to the COVID-19 surcharge

Revenue Management in the Sport Industry: an Examination of Forecasting Models and Advance Seat Section Inventory in Major League Baseball

Technological advances in data storage and processing have led to more sophisticated ticket pricing strategies in professional sport. Sport organizations are beginning to adopt a form of revenue management known as dynamic ticket pricing. Effective pricing strategies such as dynamic ticket pricing require an in-depth understanding of the nature of advance ticket inventory and accurate forecasting models to predict remaining inventory at various time horizons prior to game time. The purpose of this study was to gain an understanding of the nature of advance seat section ticket inventory. The study built on and contributed to work in sport revenue management. Although studies of sport revenue management have examined the applicability of revenue management in a sport context, there has not been a study of advance seat section ticket inventory despite the fact that sport organizations utilize price discrimination strategies at the seat section level. As such, this study provided additional insight into the applicability and potential effectiveness of a sport revenue management strategy. The methodological focus on forecasting models and accuracy enabled another contribution. A 3x3x6x7 full factorial research design examined the accuracy of various forecasting models under different data strategies, time horizons, model parameters, and levels of the values of T and K used in the moving average and exponential smoothing forecasting models. Statistically reliable differences existed between data strategies with the classical pickup data strategy providing the best forecasts of final game day inventory. Within the classical pickup strategy, no reliable differences in forecast models were detected nor were forecasts found to significantly differ when changing the value of T or K. Finally, forecast accuracy was shown to follow the theoretically predicted best to worst pattern as days out increased. A profile analysis of seat section ticket inventory showed seat sections exhibit different slopes and changes in slope over time. The general pattern of ticket inventory followed a linear trend but with varying slopes. Steeper slopes were found at 20, 10, and 5 days out followed by a leveling out between 5 and 3 days out which was then followed by steeper slopes from 3 days to game day. This finding suggested that optimizing a sport revenue management plan should include forecasting at the seat section level

An Examination of Sport Ticket Price Acceptability and Surcharge Transparency in Partitioned Pricing

There has been a recent price policy change in the sport industry that ticket resale companies attempted to reveal any additional fees upfront to increase price transparency and protect consumers in the marketplace. This policy change was announced in early 2020 (Thompson, 2020). However, as the coronavirus outbreak affected live events to be canceled, become virtual, or have a limited facility capacity (Apstein, 2020; Perry, 2020), it disabled the resale companies to see consumer responses to their policy change that may increase or decrease ticket revenues. In addition, charging additional fees to the ticket face value is a form of partitioned pricing and drip pricing, which contains two price components: a base price and surcharges (Burman & Biswas, 2007; Morwitz et al., 1998). This means that purchase decisions may vary depending on whether the base price or the total cost of tickets is below (or above) the price range individuals consider acceptable. This makes an examination of price acceptability within partitioned pricing and drip pricing imperative in terms of understanding consumer purchase decisions. Therefore, this particular study aimed to disclose consumer perceptions (i.e., surcharge sensitivity, surcharge acceptability, surcharge skepticism) and purchase behaviors (i.e., search intention, purchase intention) regarding surcharge transparency. An experimental between-participants design with four groups (no fees vs. transparent fees vs. a notification of fees vs. hidden fees) was used to manipulate surcharge transparency that is currently employed on the secondary market by various companies. An online survey was developed on Qualtrics, and data from a total of 547 participants was collected on Amazon Mechanical Turk. The author employed four multivariate analyses of covariances for data analysis. This study found that, first, when ticket prices are below individuals’ acceptable price, they have high intention to purchase the ticket. The opposing result occurred when ticket prices exceed individuals’ threshold. However, consumers consistently have high search intention regardless of price acceptability. Second, due to sport consumers’ acknowledgment that additional surcharges are added to ticket prices when purchasing them on the secondary market, the way surcharges are presented does not vary their surcharge perceptions. Rather, the size of surcharges (e.g., $2.50 vs. 25% of the base price) differs surcharge perceptions. The acknowledgement of estimated fees on the secondary market makes the effects of surcharge transparency insignificant on purchase behavior as well as the moderating impacts of surcharge perceptions. This study makes contributions to the PP literature and the sport consumer behavior literature. The findings contribute to providing a comprehensive understanding of consumer behavior with two common surcharges in live ticket purchases. This study particularly advances the literature with fundamental moderators (e.g., price acceptability, surcharge transparency) and essential outcome variables (e.g., search intention, purchase intention) within the context of sports. In addition, the present study is guided by attribution theory (Heider, 1958; Kelley & Michela, 1980); i.e., sport consumers acknowledge that surcharges exist in order to provide the ticketing service for consumers and to generate revenues for organizations. This attribution neutralizes the effects of PP on the secondary market. From the managerial standpoint, the findings of this study provide resale companies with effective price presentation styles. In order to enhance sales revenue, companies are recommended to employ all-inclusive pricing (no price breakdowns). However, companies should ensure they clearly communicate any fees that are included in the total price in order to increase price transparency

Risk in Sports and Challenges for Sports Organizations

Success, injuries, future career opportunities of athletes, and the societal gains of participating in sports and organizing (mega) sports events are all related to individual risk-taking behavior. Although the sports economics and management literature has broadly addressed these issues, it is surprising that less attention has been paid to the implications of risk-taking on the organization of sports in general and, more particularly, on the design and behavior of sports organization members

Risk in Sports and Challenges for Sports Organizations

Success, injuries, future career opportunities of athletes, and the societal gains of participating in sports and organizing (mega) sports events are all related to individual risk-taking behavior. Although the sports economics and management literature has broadly addressed these issues, it is surprising that less attention has been paid to the implications of risk-taking on the organization of sports in general and, more particularly, on the design and behavior of sports organization members

Essays on Entertainment Analytics

This thesis explores live entertainment analytics and revenue management allocation strategies for live entertainment. In Chapter two, we look at empirical factors that effect the success of Broadway shows. How well-known actors (stars) effect film revenues has been a recurring question of entertainment producers and academics. Because a film cannot be disentangled from a star involved, researchers have long struggled to rule out ``reverse-causality\u27\u27 - that stars have access to higher quality movies. Using a novel data set that includes Broadway show revenues and actor usage, we provide a fixed-effects regression and case studies. We find across multiple specifications that increases in star power in a show improve revenue. Motivated by social grouping and the associated operational challenges, in Chapter three we formulate and study extensions to the Dynamic Stochastic Knapsack Problem (DSKP). We compartmentalize the knapsack according to predefined reward-to-weight ratios, and incorporate a stochastic interaction between the offered set of open compartments and the item placement. Using a specific interaction function inspired by customer choice in the entertainment industry, we provide an algorithm to determine the optimal solution and obtain insights into structural properties. Given the computational complexity of the dynamic program we also propose and analyze via simulation a heuristic algorithm. In Chapter four, in a large sequence of simulations, we propose and study practical heuristic algorithms on which seats should be offered to requests. We propose an algorithm that offers revenue improvements from a ``naive\u27\u27 policy on the order of 5-10%. Throughout, we aim for managerial relevance, providing implications to current techniques both in strategy as well as operations

Weather and Climate Information for Tourism

The tourism sector is one of the largest and fastest growing global industries and is a significant contributor to national and local economies around the world. The interface between climate and tourism is multifaceted and complex, as climate represents both a vital resource to be exploited and an important limiting factor that poses risks to be managed by the tourism industry and tourists alike. All tourism destinations and operators are climate-sensitive to a degree and climate is a key influence on travel planning and the travel experience. This chapter provides a synopsis of the capacities and needs for climate services in the tourism sector, including current and emerging applications of climate services by diverse tourism end-users, and a discussion of key knowledge gaps, research and capacity-building needs and partnerships that are required to accelerate the application of climate information to manage risks to climate variability and facilitate successful adaptation to climate change