Online Personalization And Information Sharing Under Horizontal Relationship

Customer preference information is of great importance for vendors to carry out price discrimination and targeted marketing. Advanced Internet technologies, especially web 2.0 and web-economy, have been provided accessibility and allowed vendors to acquire these information by the user-community and online personalization technologies. This study investigates an information market where the complementary firm pays to the vendor to indirectly acquire the customer preference information, which could be costly to acquire. We develop an economic model to examine vendor’s optimal information acquisition and sharing strategies under horizontal relationship under different payment formats of the complementary firm (i.e. fixed-fee or service-rate payment). We show that both payment formats improve the basic personalization service, and the basic personalization service is equal under two payment cases, but the extra personalization service under fixed-fee payment is higher than that under the service-rate payment. Nevertheless, the vendor’s equilibrium benefits are improved with information sharing under both payment formats. Moreover, although the complementary firm would get zero benefits under fixed-fee payment and positive benefits under service-rate payment, the customer preference information can be acquired under both cases. Our findings not only help researchers interpret why the vendors implement information sharing strategies, but also assist practitioners in developing better social commerce and cooperation strategy. The implications of this paper can shed light on how firms interact under horizontal relationship where a vendor possesses information superiority

Event studies on the market value effects of new product introduction delays for focal companies and suppliers

New product introduction delays can be caused by various factors, including setbacks in overly ambitious technological advancements and quality issues. Sometimes organisations deliberately delay a new product introduction for strategic reasons, such as to avoid cannibalisation of existing products. Such delays can have negative consequences for profitability, market share and firm value. Extant studies find that such delays can be managed by designing for manufacture and optimising project scheduling. Despite this, new product introduction delays continue to plague organisations. This research shows that there is a negative market value effect not only for focal companies announcing a new product introduction delay but also for their suppliers. For focal companies, the roles of several key firm resources are studied. More specifically, when experiencing a new product introduction delay, the research observes that there is a more negative change in market value is experienced by more profitable firms and those with higher advertising intensity. However, operational slack positively moderates the impact of advertising intensity on market value. Furthermore, a study of the Boeing 787 Dreamliner's introduction delays shows that the negative market value effect spills over from the focal company to their suppliers, irrespective of whether or not they were directly involved with the affected product. Further insight demonstrates that the initial new product introduction delay is more negative compared to a further delay. A systematic literature review of new product introduction delays forms the foundation of the subsequent empirical research. Following this, the short-term event study method followed by cross-sectional regression analysis is used in this research to empirically investigate the role of firm resources on market value effects for S&P 500 companies experiencing a new product introduction delay from the perspective of signalling theory. To do so, a dataset is compiled using secondary data on new product introduction delays from LexisNexis News and stock market data from Wharton Research Data Services (WRDS), spanning a 20 year period from 1999 to 2018. Data on firm resources is retrieved from Compustat. Moving beyond the focal company, the short-term event study is also used to uncover the spillover effects of such delays for suppliers of a focal company. To do so, the Boeing 787 Dreamliner's introduction delays are used. This enables study of market value effects of new product introduction delays for the focal company (i.e. Boeing) and its suppliers. Further classification of suppliers gives further insight via t-tests. Secondary data is compiled from Bloomberg SPLC and Airframer to identify Boeing's and the Dreamliner's suppliers, whilst stock market data and further supplier data is retrieved from Datastream. This data focuses on the initial delay to the Dreamliner introduction in 2007 and a further delay in 2009. The findings of this research provide important contributions to research and practice. The results advance the field by improving the understanding of the market value effects of new product introduction delays for both focal companies and suppliers. The findings provide knowledge to how their firm resources may be associated with a more or less negative market value if and when they experience a new product introduction delay. It is imperative to uncover the market value effects of new product introduction delays beyond the focal company for other parties, such as suppliers, because not doing so missed a large part of understanding of what impact such delays have on various organisations. This research is intended to stimulate further research on what new product introduction delays mean for organisations in the hope of developing more effective ways of managing and potentially preventing such delays. The main limitations of this research are that the event study method assumes the efficient market hypothesis when in reality markets may not always operate perfectly efficiently. Secondly, event studies measuring market value changes can only analyse public limited companies (PLCs), meaning the impact of such delays on companies which are not listed on a stock market is uncertain

Information acquisition in new product introduction

In the presence of huge losses from unsuccessful new product introductions, companies often seek forecast information from various sources. As the information can be costly, companies need to determine how much effort to put into acquiring the information. Such a decision is strategically important because an insufficient investment may cause lack of knowledge of product profitability, which in turn may lead to introducing a loss-making product or scrapping a potentially profitable one. In this paper, we use decision analytical models to study information acquisition for new product introduction. Specifically, we consider a decision maker (DM) who, prior to introducing a new product, can purchase forecasts and use the information to update his knowledge of the market demand. We analyze and compare two approaches: The first approach is to determine the total amount of forecasts to purchase all at once. The second one is to purchase forecasts sequentially and, based on the purchased forecasts, determine whether those forecasts are informative enough for making an introduction decision or an additional forecast is needed. We present dynamic programming formulations for both approaches and derive the optimal policies. Via a numerical study, we find the second approach, i.e., purchasing forecasts sequentially, can generate a significant profit advantage over the first one when (1) the cost of acquiring forecasts is neither too high nor too low, (2) the precision of the forecasts is of a moderate level, and (3) the profit margin of the new product is small.Decision analysis Dynamic programming Forecasting Marketing Production