Market Segmentation in the 21st Century: Discrete Solutions to Continuous Problems

Market segments exist because of information and cost constraints If manufacturers had accurate individual-level demand information and the ability to produce and deliver unique products at low cost, then individual customization of products would be a viable market strategy But as uncertainty about consumer demand increases and/or the cost of customization increases, firms find it more profitable to reduce the variety of the products they offer This paper reports on a critical examination of trends in the analysis of customer data and in reductions in the cost of customization brought about by innovations such as the Internet and flexible manufacturing systems We conclude that recent trends are not sufficient to support individual customization in most product categories However, despite the inability of these trends to support individual customization, we predict several changes In the dimensions surrounding successful segmentation strategies that will be used by firms in the future

Pricing in inflationary times: The penny drops

How does the frequency and magnitude of micro-price rises and falls relate to macroeconomic crisis, as well as moderation? Weekly micropricing behaviour in British groceries was investigated across three leading retailers over the moderation period 2004–7 and the crisis period 2008–10. We find significant price flexibility sharply distinguished from behaviour observed in most previous works. Downward price flexibility increased markedly in 2008. Overall basket prices rise, but significantly more individual prices fall than rise in the latter period. Tests of obfuscation in price setting suggested that large numbers of small price falls were used to disguise the basket price rises

Market Segmentation in the 21st Century Discrete Solutions to Continuous Problems

Market segments exist because of information and cost constraints If manufacturers had accurate individual-level demand information and the abllity to produce and deliver unique products at low cost, then individual customization of products would be a viable market strategy But as uncertainty about consumer demand increases and/or the cost of customization increases, firms find it more profitable to reduce the variety of the products they offer This paper reports on a critical examination of trends in the analysis of customer data and in reductions in the cost of customization brought about by inovations such as the Internet and flexlble manufacturing systems. We conclude that recent trends are not sufficient to support individual customization in most product categories. However, despite the inability of these trends to support individual customization, we predict several changes In the dimensions surrounding successful segmentation strategies that will be used by firms in the future

The prospect of a perfect ending: Loss aversion and the round-number bias

Studies across a range of domains have shown that individuals tend to focus on round numbers as cognitive reference points; a so-called left-digit effect. We explain this effect by combining analog numerical heuristics with prospect theory in order to develop an analog value function that predicts the key characteristics of the left-digit effect. Most importantly, this value function predicts an unreported phenomenon, namely; that the left-digit effect will be more pronounced in situations involving losses (cf. gains). We confirm this prediction in both a laboratory experiment regarding hypothetical investments and analysis of buy-sell imbalances in over 15 million trades by investors in a financial market. We conclude that our analog value function is a promising explanation for the left-digit effect. Furthermore, we suggest that interventions aimed at reducing costly buy-sell imbalances in financial markets should focus on the decisions made by investors when they are facing loss

De novo design of transmembrane β-barrels

Transmembrane b-barrel proteins (TMBs) are of great interest for single-molecule analytical technologies because they can spontaneously fold and insert into membranes and form stable pores, but the range of pore properties that can be achieved by repurposing natural TMBs is limited. We leverage the power of de novo computational design coupled with a “hypothesis, design, and test” approach to determine TMB design principles, notably, the importance of negative design to slow b-sheet assembly. We design new eight-stranded TMBs, with no homology to known TMBs, that insert and fold reversibly into synthetic lipid membranes and have nuclear magnetic resonance and x-ray crystal structures very similar to the computational models. These advances should enable the custom design of pores for a wide range of applications

Price-Endings When Prices Signal Quality

This paper provides a theoretical explanation for why firms behave as though they use round prices to signal quality. By replacing the linear demand curve in Bagwell and Riordan's (1991) price as a signal of quality model with a kinked demand curve, and analyzing what price endings firms are most likely to use, the following observations can be made: (1) Firms that are using high prices to signal quality are more likely to set those prices at round numbers, and (2) price-endings themselves are not necessarily signals of quality. A simulation was conducted to demonstrate that these findings generally hold true even in the presence of demand spikes at 9-ending prices (e.g., Schindler and Kibarian 1996). Finally, empirical evidence is provided to demonstrate that firms tend to use more round prices for higherquality products, and that this relationship is even stronger for product categories where consumers are less able to detect the true level of quality prior to purchase.price-endings, quality, signaling, round prices