Innovation and Price Competition in a Two-Sided Market

We examine a platform's optimal two-sided pricing strategy while considering seller-side innovation decisions and price competition. We model the innovation race among sellers in both finite and infinite horizons. In the finite case, we analytically show that the platform's optimal seller-side access fee fully extracts the sellers' surplus, and that the optimal buyer-side access fee mitigates price competition among sellers. The platform's optimal strategy may be to charge or subsidize buyers depending on the degree of variation in the buyers' willingness to pay for quality; this optimal strategy induces full participation on both sides. Furthermore, a wider quality gap among sellers' products lowers the optimal buyer-side fee but leads to a higher optimal seller-side fee. In the infinite innovation race, we perform computations to find the stationary Markov equilibrium of sellers' innovation rate. Our results show that when all sellers innovate, there exists a parameterization under which a higher seller-side access fee stimulates innovation. © 2011 M.E. Sharpe, Inc.link_to_subscribed_fulltex

The Effect of Promotion Integration Strategy on Sales Performance in the Context of Multiple Platforms: Considering the Moderating Effect of Platform’s Market Demand

Price and promotion strategy have been widely discussed in multi-channel retailing, but little study was focused on the promotion strategy in the context of multiple platforms. Through transaction data from a company’s different platforms, our study investigated the impact of promotion integration strategy on company’s overall sales performance on different platforms. Combined with platform’s index data about product market demand, the moderating effect of platform’s market demand was further evaluated. Using a fixed-effect model, our research found the positive effect of promotion timing integration and the negative effect of promotion depth integration on sales performance. We also found the moderating effect of platform’s market demand. Thus, our study generates important theoretical and practical implications for managing promotion activity on multiple platforms

The digital transformation of business models in the creative industries: A holistic framework and emerging trends

This paper examines how digital technologies facilitate business model innovations in the creative industries. Through a systematic literature review, a holistic business model framework is developed, which is then used to analyse the empirical evidence from the creative industries. The research found that digital technologies have facilitated pervasive changes in business models, and some significant trends have emerged. However, the reconfigured business models are often not ‘new’ in the unprecedented sense. Business model innovations are primarily reflected in using digital technologies to enable the deployment of a wider range of business models than previously available to a firm. A significant emerging trend is the increasing adoption of multiple business models as a portfolio within one firm. This is happening in firms of all sizes, when one firm uses multiple business models to servedifferent markets segments, sell different products, or engage with multi-sided markets, or to use different business models over time. The holistic business model framework is refined and extended through a recursive learning process, which can serve both as a cognitive instrument for understanding business models and a planning tool for business model innovations. The paper contributes to our understanding of the theory of business models and how digital technologies facilitate business model innovations in the creative industries. Three new themes for future research are highlighted

A Stirring Effect of the Loss Leader Strategy in a Two-Sided Online Platform

Loss leader strategy refers to a pricing strategy in which sellers set much lower prices than the original ones for specific products to attract user attention. Similar to brick-and-mortar stores, online marketplaces often try to expose their platforms more visibly to potential buyers by offering a particular product at a lower price. Yet, the effects of the loss leader strategy on the online marketplaces is indeterminate and largely remains an empirical question due to distinguished characteristics of online marketplaces from the traditional retail setting. This study examines the effects of the loss leader strategy in the context of the two-sided online platform, focusing on the changes of both buying and selling sides after the introduction of loss leader. We collaborate with an online travel marketplace that introduced loss leaders (ticket products with lower price) to parts of sub-markets, providing a natural experimental setting for examining the effect of the loss leaders

Developing an Industrial IoT Platform – Trade-off between Horizontal and Vertical Approaches

Demands for a digitalized, connected, and smart production provide a fertile ground for industrial Internet-of-Things (IIoT) platforms to arise within the manufacturing industry (e.g., Siemens Mind Sphere, AXOOM Smart Enterprise, FORCAM FORCE). Nevertheless, many companies struggle to successfully kick-off platform ecosystems. Information Systems (IS) literature is of limited help, because insights on managing platform ecosystems are mostly derived from successful examples in the business-to-consumer (B2C) context. To better understand the challenging situation of companies in the emerging IIoT environment, we conducted an in-depth case study at a prospective platform provider. Insights gained through interviews and engagement in the field uncovered a tension between a horizontal platform strategy and vertical integrated solutions as a central challenge for companies aiming to launch an IIoT-platform in the market. By conceptualizing this trade-off, its causes along with related benefits and challenges, we add to existing literature on platform governance and launch strategies

Digital Platform Strategy - A Systematic Critical Review

While the transformative effect of digital platforms is broadly recognized, digital platform-related research evolved in largely disconnected streams focusing on technical platform architecture, network effects, and specific tactical decisions, without offering a holistic view of digital platform strategy. With the goal of advancing digital platform strategy research, we conduct a systematic critical review of research published in the leading Information Systems journals through a pragmatic business strategy lens that argues that markets, partnerships, differentiators, staging, and profit logic form the core elements of a holistic business strategy. We outline the core insights in extant research and we identify a number of promising opportunities for expanding the scope of digital platform strategy research in Information Systems

Attitudes toward Service Innovations in Red Meat Industry and its Consumption Effects on Nigerian Consumers

This paper focused on the Nigerian beef market, where meat safety is one of the most important issues of product quality for retailers, consumers, and the legal protection afforded consumers of the product. In today’s challenging economic climate, every business needs an organization-wide commitment to a comprehensive marketing strategy so it will stand out among the growing number of competitors competing for consumers. One of the ways of doing this is by providing quality products/services. The meat industry in Nigeria has failed to do this, thus this research was carried out to see how innovation can bring quality into this industry and some of the laws relating to consumer protection in Nigeria. The total population in Nigeria was last recorded at 170,123,740 (million) people in July 2012 (Indexmundi.com). According to Osho and Asghar (2005) the national population figure by the Nigeria Census Board is 170 million; this not only make Nigeria one of the largest meat consumers in this region of the world, but also one of the largest meat producing countries in Africa. Nevertheless, the deplorable conditions of meat products from the abattoirs to consumers are issues that could not just be swept under the rug. This paper; therefore, explored how innovation can better improve the delivery of quality meat products to Nigeria consumers. Two hundred and fifty (250) meat consumers in Lagos, Nigeria were randomly chosen from Ikotun area; where an abattoir operates and were required to answer few questions in a carefully designed questionnaire so as obtain relevant information. Chi-Square Tests and Cross tab was used in analyzing the data. The findings shows that χ2 =49.706, df=9, and p=.000; indicates that innovative steps of the meat handling improves quality of meat provided to the consumers and drastically reduces the problems presently associated with the industry; therefore, it is recommended that, the meat industry must be committed to supplying its customers with products that are safe and quality assured

Attitudes toward Service Innovations in Red Meat Industry and its Consumption Effects on Nigerian Consumers

This paper focused on the Nigerian beef market, where meat safety is one of the most important issues of product quality for retailers, consumers, and the legal protection afforded consumers of the product. In today’s challenging economic climate, every business needs an organization-wide commitment to a comprehensive marketing strategy so it will stand out among the growing number of competitors competing for consumers. One of the ways of doing this is by providing quality products/services. The meat industry in Nigeria has failed to do this, thus this research was carried out to see how innovation can bring quality into this industry and some of the laws relating to consumer protection in Nigeria. The total population in Nigeria was last recorded at 170,123,740 (million) people in July 2012 (Indexmundi.com). According to Osho and Asghar (2005) the national population figure by the Nigeria Census Board is 170 million; this not only make Nigeria one of the largest meat consumers in this region of the world, but also one of the largest meat producing countries in Africa. Nevertheless, the deplorable conditions of meat products from the abattoirs to consumers are issues that could not just be swept under the rug. This paper; therefore, explored how innovation can better improve the delivery of quality meat products to Nigeria consumers. Two hundred and fifty (250) meat consumers in Lagos, Nigeria were randomly chosen from Ikotun area; where an abattoir operates and were required to answer few questions in a carefully designed questionnaire so as obtain relevant information. Chi-Square Tests and Cross tab was used in analyzing the data. The findings shows that χ2 =49.706, df=9, and p=.000; indicates that innovative steps of the meat handling improves quality of meat provided to the consumers and drastically reduces the problems presently associated with the industry; therefore, it is recommended that, the meat industry must be committed to supplying its customers with products that are safe and quality assure

Governance of nonprofit platforms-Onboarding mechanisms for a refugee information platform

The number of refugees arriving in Europe has increased dramatically in 2015. While governments, initiatives, and volunteers have invested substantial effort into supporting refugees, an information deficit impedes the efficacy of this collaboration. Information platforms are used to tackle this information deficit. However, the onboarding process of information providers is a critical challenge for the platforms?overall success. On the basis of observations, interviews with information providers and user experience tests, we drafted a case study describing the governance strategies applied to establish a sustainable onboarding of information providers on a nonprofit information platform for refugees. Contributing to recent literature on platform governance, our results show that governance mechanisms are implemented differently for nonprofit platform ecosystems than for commercial platform ecosystems. Building on our results, we provide practical implications by deriving a platform governance strategy that supports a sustainable onboarding of information providers

Examining price and service competition among retailers in a supply chain under potential demand disruption

© 2017 Elsevier Ltd Supply chain disruptions management has attracted significant attention among researchers and practitioners. The paper aims to examine the effect of potential market demand disruptions on price and service level for competing retailers. To investigate the effect of potential demand disruptions, we consider both a centralized and a decentralized supply chain structure. To analyze the decentralized supply chain, the Manufacturing Stackelberg (MS) game theoretical approach was undertaken. The analytical results were tested using several numerical analyses. It was shown that price and service level investment decisions are significantly influenced by demand disruptions to retail markets. For example, decentralized decision makers tend to lower wholesale and retail prices under potential demand disruptions, whereas a proactive retailer needs to increase service level with an increased level of possible disruptions. This research may aid managers to analyze disruptions prone market and to make appropriate decision for price and service level. The manufacturer or the retailers will also be able to better determine when to close a market based on the proposed analysis by considering anticipated disruptions. The benefits and usefulness of the proposed approach are explained through a real-life case adopted from a toy supply chain in Bangladesh