Country of Origin Labeling with Horizontal Differentiation and Cost Variability

This paper studies whether a seller achieves higher profits by providing consumers with information that allows them to distinguish between products from different countries, and how mandatory provision of such information impacts welfare. We analyze a model of multi-product monopoly with horizontal differentiation and random country-specific input costs. We find that if the variability in the input costs is sufficiently high and the share of consumers with high valuations is in some intermediate range, the seller prefers to withhold information about product origin. Mandatory labeling of products with their country of origin may reduce or increase welfare depending on the share of consumers with high valuations. We also discuss extensions of the basic model that allow for continuous distributions of valuations and input costs, and consumer learning.Country of origin labeling, consumer learning, food policy, Agricultural and Food Policy, Industrial Organization, International Relations/Trade,

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

Dynamic Price Competition: Theory and Evidence from Airline Markets

We introduce a model of dynamic pricing in perishable goods markets with competition and provide conditions for equilibrium uniqueness. Pricing dynamics are rich because both own and competitor scarcity affect future profits. We identify new competitive forces that can lead to misallocation due to selling units too quickly: the Bertrand scarcity trap. We empirically estimate our model using daily prices and bookings for competing U.S. airlines. We compare competitive equilibrium outcomes to those where firms use pricing heuristics based on observed internal pricing rules at a large airline. We find that pricing heuristics increase revenues (4-5%) and consumer surplus (3%)

Revenue Management: Advanced Strategies and Tools to Enhance Firm Profitability

Much of the past research on revenue management (RM) has focused on forecasting and optimization models and, more recently, on adaptation of RM to the specific needs in various industries, such as restaurants, car rental, transport and even health care services. Surprisingly, although many industries have become increasingly customer-focused, the customer seems to have been relatively forgotten in this stream of research. Our intent in this monograph is to help explore the role of marketing in RM in more depth

Revenue Management, Dynamic Pricing and Social Media in the Tourism Industry: A Case Study of the Name-Your-Own-Price Mechanism

The application of revenue management (RM) is changing more rapidly than ever before, driven as an important factor of the daily operation to keep prices competitive and to create real-time optimal pricing. In the age of the Internet and social media, negotiated fixed rates have become outmoded. Consumers now have access to online rate comparisons and real time reviews. They think more strategically when making purchasing decisions. Thus, they become more demanding. This research provides an empirical study of revenue management and pricing with an emphasis given to the hospitality industry. The aim of this research is to examine the gap between the theoretical approach and the empirical analysis, the rationality between the implementation of dynamic pricing approaches and the impact on the customer. Furthermore, the research examines the perception of consumers’ willingness to pay when using the Name-Your-Own-Price (NYOP) mechanism, which allows customers to have a greater influence on the amount they are prepared to pay. Instead of posting a price, the seller waits for a potential buyer’s offer, which he or she can either accept or reject. Finally, this study examines, whether the use of social media plays a decisive role in the online purchase environment used by the hospitality sector and the effect it has on a consumer’s willingness to pay. Accordingly, hotel revenue managers will be able to use the findings of this study to effectively plan their short-term, and long-term pricing strategies to generate a stronger revenue management performance for their property, namely to increase the RevPAR (revenue per available room). The research can be useful to businesses, as empirical data and tests were employed to determine what kind of impact the different pricing policies have on the long-term profit optimization. These practical and theoretical elements of the field reinforce each other‚ as well as to a large extent, the constructive interplay of theory and practice. The research is twofold, the holistic approach, which discusses the development of the theoretical dimension, is complemented by the practical analysis of the collected data of the surveys. This approach ensures the relevant observation of ‘real-time’ data and the evaluation of the set of hypotheses. The study conducted two large scale interrelated structured surveys. The first structural survey (NYOP) provides a better understanding of the final consumer, by using the name-your-own-price mechanism and by observing the extended role of social media in the booking procedure. Hypotheses were tested and in the second survey in-depth data from revenue managers and executives working across the tourism industry was collected, in an attempt to measure the use of pricing strategies within the industry. The research contributes to the theory by empirical testing how the extended RM objectives influence RM and pricing. It provides a clear picture of the necessary elements for a successful implementation of pricing strategies. Finally, the study has implications for the consumer. Thus, the researcher investigates consumer’s perception to the NYOP model and the expanding role of social media to the consumer-booking pattern

Quality and Operations Management in Food Supply Chains: A Literature Review

We present a literature review on quality and operations management problems in food supply chains. In food industry, the quality of the food products declines over time and should be addressed in the supply chain operations management. Managing food supply chains with operations management methods not only generates economic benefit, but also contributes to environmental and social benefits. The literature on this topic has been burgeoning in the past few years. Since 2005, more than 100 articles have been published on this topic in major operations research and management science journals. In this literature review, we concentrate on the quantitative models in this research field and classify the related articles into four categories, that is, storage problems, distribution problems, marketing problems, and food traceability and safety problems. We hope that this review serves as a reference for interested researchers and a starting point for those who wish to explore it further

U.S. Fresh Fruit and Vegetable Marketing: Emerging Trade Practices, Trends, and Issues

In the past year, trade practices between fresh produce shippers and food retailers gained national attention. Shippers are concerned that recent retail consolidation has led to market power and the growing incidence of fees and services. Retailers argue that these new trade practices reflect their costs of doing business and the demands of consumers. Trade practices include fees such as volume discounts and slotting fees, as well as services like automatic inventory replenishment, special packaging, and requirements for third-party food safety certification. Trade practices also refer to the overall structure of a transaction-for example, long-term relationships or contracts versus daily sales with no continuing commitment. This study compares trade practices in 1999 with those prevalent in 1994, placing them in the broader context of the evolving shipper/retailer relationship. Most shippers and retailers reported that the incidence and magnitude of fees and services associated with transactions has increased over the last 5 years. Fees paid to retailers are usually around 1-2 percent of sales for most of the commodities we examined, but 1-8 percent for bagged salads. Information on the incidence and magnitude of these new practices is scarce. To augment information that is publicly available, we interviewed a limited number of shippers, retailers, and wholesalers about their firms and trade practices. We received a high level of voluntary cooperation from the interviewed firms.produce, fresh fruit and vegetables, fresh-cut produce, trade practices, fees and services, slotting fees, retail consolidation, produce shipper consolidation, Crop Production/Industries, Marketing,

Can Quality Revitalize the Alaskan Salmon Industry?

Declining salmon prices, due primarily to expansion of farmed salmon production, have reduced revenues for Alaska’s wild salmon fisheries by roughly 62 percent over the past 10 years. One possibility for reversing this trend is to differentiate wild and farmed salmon in consumer markets through quality improvements and marketing. We use a simple conceptual model to highlight the challenges that Alaska’s wild salmon industry must overcome before the industry is likely to see significant revenue gains from increased quality. Our tentative conclusion is that product differentiation could increase profits for wild salmon. However, implementation may require significant departures from traditional production and management practices and possibly an amendment to the Alaska state constitution

The use of yield management within the kingdom of Saudi Arabia hotels

The airline industry has successfully adopted yield management (YM), particularly after the industry was deregulated in the late 1970s. In this study, YM is applicable to the hotel industry as a strategy to maximise profits. Thus, it involves the allocation of resources among various customers in hotel rooms relative to the existing market characteristics. In doing so, YM’s core concept is the provision of the right service to customers at the right prices. The aim of this study is to examine the practices and perceptions concerning YM as per the understanding and awareness of hotel managers. The study investigates several Saudi hotels of various sizes that use YM, and it identifies revenue management strategies and general practices within the hotel industry. The investigation took place in seven key areas of the hotel industry: location, occupancy, pricing strategy, price-adjustment strategies, HR management, customer satisfaction and third-party websites. The study involved two steps to achieve its purpose. First, YM practices were investigated in comparison to the seven key areas that influence revenue. Moreover, there was an emphasis on determining whether there was an attempt to manage revenue within the hotel industry. The results from the investigation are presented using a descriptive approach. The second step involved establishing the use of YM as a tool for managing revenue in hotel operations. This shows how revenue management through YM should be conducted. These results are presented using a normative approach. In the methodology, qualitative research is applied. Through this approach, 13 revenue managers and seven general managers from various Saudi hotels in Riyadh, the Eastern Province and Mecca were interviewed. Further, documents and direct observations were used to collect vital data to compare room rates through the use of direct and indirect distribution channels. Here, direct distribution channels involve making direct calls to hotels, as well as the use of official hotel websites. Conversely, indirect distribution channels involve the use of Booking.com and Agoda.com. These different options were then compared to observe the option that was more efficient in revenue management. From the comparison, the results showed that the practices and perceptions of YM were reasonable in the cities’ hotels. Of particular interest was the fact that respondents were aware of some key principles of YM. Consequently, many of these principles had been adhered to in room revenue management. For instance, stakeholders understood the significance of segmenting potential and current customers into various groups. This is critical, as these groups have different priorities, income levels and goals. As a rule, attention focuses on criteria such as ability and willingness to pay. The study recommends strategies that can be adopted by Saudi hotels to overcome the misconceptions and perceptions of YM. For instance, the system must be interlinked with location, occupancy, pricing strategy, price-adjustment strategy, HR, customer relations and the Internet. Interlinking the system with these key concepts is essential to maximise profits in the hotel industry. In essence, this paper offers knowledge to further the research on the applicability of the YM concept within the hotel industry in Saudi Arabia

Revenue Management Concept Training: Its Efficacy as an Intervention Methodology for Hotel Front Desk Employees and Hotel Managers

The purpose of this study was determine if a basic Revenue Management (RM) concept training program can successfully teach hotel front desk employees and managers RM fundamentals. The objectives of this study were (a) to evaluate the reaction or satisfaction level of hotel front desk employees and managers in reference to the training program, and (b) to examine the training program’s effectiveness in teaching basic RM concepts. A basic revenue management training program and examination was utilized in a pre- and post-test quasi-experimental design model with a treatment and control group to examine if learning had taken place. The study consisted of 49 participants from eight hotels. Hypotheses one, two, and four were supported by the results. Based on the findings, the basic RM concept training program did successfully teach front desk employees and hotel managers RM fundamentals. The researcher suggests that future RM training programs for both the front desk employees and hotel managers to continue to focus on basic RM concepts. The researcher further suggests the RM training programs include more advanced RM concepts for the hotel managers