Pricing and Market Segmentation Using Opaque Selling Mechanisms

In opaque pricing certain characteristics of the product or service are hidden from the consumer until after purchase, transforming a differentiated good into somewhat of a commodity. Opaque pricing has become popular in service pricing as it allows firms to sell their differentiated products at higher prices to regular brand loyal customers while simultaneously selling to non loyal customers at discounted prices. We develop a stylized model of consumer model a monopolist selling a product via three selling channels: a regular full information channel, an opaque posted price channel and an opaque bidding channel where consumers specify the price they are willing to pay. We illustrate the segmentation created by opaque pricing as well as compare optimal revenues and prices for sellers using regular full information channels with those using opaque selling mechanisms in conjunction with regular channels. We also study the segmentation and policy changes induced by capacity constraints

A Choice-Based Dynamic Programming Approach for Setting Opaque Prices

Opaque pricing is a form of pricing where certain characteristics of the product or service are hidden from the consumer until after purchase. In essence, opaque selling transforms a differentiated good into a commodity. Opaque pricing has become popular in service pricing as it allows firms to sell their differentiated product at higher prices to regular brand loyal customers while simultaneously selling to non-brand loyal customers at discounted prices. We use a nested logit model in combination with logistic regression and dynamic programming to illustrate how a service firm can optimally set prices on an opaque sales channel. The choice model allows the characterization of consumer trade-offs when purchasing opaque products while the dynamic programming approach allows the characterization of the optimal pricing policy as a function of inventory and time remaining. We compare optimal prices and expected revenues when dynamic pricing is restricted to daily price changes. We provide an illustrative example using data from an opaque selling mechanism (Hotwire.com) and a Washington DC-based hotel

Room-Risk Management at Sunquest Vacation

This article outlines some of the basic complexities that originate with the acquisition of hotel rooms for a reseller of bundled vacations. A tour operator typically acquires or contracts for service capacity, bundles the services (air, hotel, food and beverage, and excursions), then markets and sells to consumers. The article focuses on the short-term aspects of room-risk management for the tour operator, specifically how to manage blocks of take-or-pay contracted rooms. The room-risk management problem is formulated as a math program with the objective of minimizing wasted rooms. While the exposition focuses on a particular reseller of packaged vacations, the method is applicable to any firm acquiring capacity on take-or-pay contracts and reselling this capacity as bundled vacations

From Government to Market?:A Discrete Choice Analysis of Policy Instruments for Electric Vehicle Adoption (CEIBS Working Paper, No. 039/2020/POM, 2020)

With the calls for policy instruments to shift from “government” to “market”, surging interest leads to a broad debate on the role of market-oriented policy instruments in promoting the adoption of electric vehicles (EVs). As the two prime examples of market-oriented policy instruments, personal carbon trading (PCT) and tradable driving credit (TDC) schemes are theoretically regarded to alter consumers’ EV preferences by both economic and psychological motivations. However, limited studies validate such effects. To fill the gaps, we conduct a discrete choice experimental survey by integrating vehicle, psychological, and policy attributes together. The empirical results from China reveal how consumers make trade-offs between economic and psychological motivations. In particular, although PCT and TDC can stimulate consumers’ EV adoption behaviors through monetary revenues, the positive effect of more revenues from PCT and TDC in promoting EV adoption is not always supported because EV adoption is subject to some psychological attributes, especially perceived norm pressures. It implies that consumers with stricter norms will be driven more by social and moral pressures than by monetary revenues. Even so, PCT and TDC are considered to be more powerful and sustainable than existing financial incentives. These findings not only contribute to the understanding of the interaction between psychological and policy attributes, but also provide insights for policymakers to design novel policy instruments to promote EV adoption

Thermosensitive hybrid system based on pluronic F127 and nanoclay laponite for sustained local release of lidocaine hydrochloride

A novel thermosensitive local drug release system was prepared by incorporation of biocompatible nanoclay laponite into pluronic F127 solution and characterized by rheological measurements, zeta potential measurement and in vitro drug release measurement in the presence of lidocaine hydrochloride. All the systems transited from sol to gel with increase of temperature. The lower critical solution temperature (LCST) of the composite matrix changed little with increase in the mass of incorporated nanoclay, but the modulus increased with increase in the mass of incorporated nanoclay. Thein-vitrorelease experiments revealed that the novel system provided an extended duration of drugs compared to the pluronic F127 alone. This unique feature is attributed to the interaction of nanoclay laponite with lidocaine hydrochloride and increased modulus with incoporation of nanoclay laponite. The merits of the novel system, such as good cytocompatibility, thermosensitive properties, and improved sustained local release ability, make them a promising platform for the delivery of other drugs