The effects of sensitization and habituation in durable goods markets

We develop a model to study the impact of changes in price sensitivity on the firm as it introduces multiple generations of a durable product where unit costs are a convex function of quality. We incorporate the psychological processes of sensitization and habituation into a model of discretionary purchasing of replacement products motivated by past experience. When price sensitivity decreases with each purchase (sensitization), the myopic firm offers a higher quality product at a much higher price with each generation. When price sensitivity increases with each purchase (habituation), the myopic firm engages in price skimming. When sensitization is followed by habituation, the myopic firm eventually provides higher quality than the market is willing to pay for, leading to a steep drop-off in sales and profits. The actions of the forward-looking firm depend on the discount rate. A firm with a low discount rate builds its customer base before offering a higher quality and higher priced product. In contrast, a firm with a high discount rate quickly increases price and quality following the same path to falling profits of the myopic firm. These results provide insight into the firm and consumer behaviors underlying the phenomenon of “performance oversupply” identified in the innovation literature.     

一般均衡下基于产品市场和资本市场的单名CDS定价

次贷危机呼吁新的信用衍生品定价模型, 因此为存在产品市场和资本市场的经济结构建立一般均衡的单名CDS定价模型, 使用最优化求解一般均衡下的商品价格和CDS价格. 可以发现一般均衡的CDS定价具有资本市场和产品市场的因素, 这表示CDS的价格不再是由单纯的资本市场因素决定的, 而是由无风险利率、资本产出弹性、违约率、回收率同时决定的. 通过数量约束用模拟的方式研究多个均衡的动态变化, 发现违约风险的增加使得价格剧烈波动且市场交易萎缩. 在为以中国工商银行为参考资产的CDS定价过程中, 发现各种因素在不同的时期都可能成为定价的主要影响因素. 可以发现, 次贷危机的定价体系存在着信用调整问题和定价与实体经济脱节的问题. 可以认为, 一般均衡下基于产品市场和资本市场的单名CDS定价可以囊括多个市场的交叉影响, 为衍生品定价提供一个新的方向.     

基于在线评论的多个竞争制造商和零售商的产品定价策略

在线评论作为一种产品信息传播载体,越来越受到网上电商及消费者的重视,并在很大程度上影响消费者的购买决策。本文在多个竞争性制造商为在线零售商提供可替代性产品并通过零售商销售给网络消费者的电子商务环境下,研究在线评论信息如何影响网络消费者购买决策及在线零售商和制造商的定价策略。以neo-Hoteling模型为基础,构建了依赖零售渠道在线评论的消费者选择模型,并通过模型求解定量分析了二级供应链结构分散系统下在线评论对多个竞争性制造商及零售商最优决策的影响。得到当制造商基于评论制定最优定价策略时,在线评论对市场竞争强度没有影响,但决定潜在市场大小;各产品的均衡批发价及销售价按一定的比例随评论揭示的该产品与其他产品质量均值之差(正或负)增加或减少,评论信息通常会使制造商因好评而获利,由于评论增加了不同产品需求的不对称性,零售商因而具有更大的调价空间,往往通过提高(降低)占据有利(不利)评论的产品价格获得更高的利润。     

A dynamic model for optimal design quality and return policies

A clearly explained and generous return policy has been established as a competitive weapon to enhance sales. From the firm’s point of view, a generous return policy will increase sales revenue, but will also increase cost due to increased likelihood of return. Design quality of the product has been used as a competitive weapon for a long time. This paper recognizes the relationship between design quality and price of the product, and the firm’s return policy. Quality level in the product would influence the amount of return directly. When the product quality is higher, the customer satisfaction rate will increase and the probability of return will decrease. We develop a profit-maximization model to jointly obtain optimal policies for the product quality level, price and the return policy over time. The model presented in this paper is dynamic in nature and considers the decisions as the product moves through the life cycle. We obtain a number of managerial guidelines for using marketing and operational strategy variables to obtain the maximum benefit from the market. We mention several future research possibilities.     

Estimating the market shares of stores based on the shopper's search and purchase behavior

Suppose that a consumer has decided to shop around several retail stores in an attempt to find a desired product or service. From his or her past shopping experience, the shopper may know: (1) the assortment size of each store, (2) the search cost per visit, and (3) the price variation among the stores. For such a situation, we first consider the optimal sequence of stores and the optimal search strategy from the shopper's search-theoretic point of view. Based on the assumption that shoppers follow the optimal sequencing and search strategy that maximizes his or her expected net gain, we then estimate the market share of each store in the market area. With a numerical example, we finally analyze the effects of the assortment size, the search cost, and the price variation on the market shares of existing retail stores. Based on the shopper's search and purchase model, we attempt to explain: (1) why shoppers visit bigger stores first, (2) why they visit fewer stores if the search cost is relatively higher than the product price, and (3) why they shop around more stores if the price variation among the stores is large.     

Cointegration analysis of brand and category sales: Stationarity and long‐run equilibrium in market shares

The present study uses modern time series methodology to understand long‐run equilibrium in markets and provides additional evidence of the frequent existence of stationary market shares for frequently purchased consumer products. Dekimpe and Hanssens, Marketing Science 1995; 14(2):G109–121 using a database of over 400 prior studies, found that 78 per cent of the market share series they studied were stationary, but that 68 per cent of the sales series were evolving. Our findings reconcile these results. A major contribution of this paper is its demonstration that the prior empirical evidence that a majority of sales series is in evolution is consistent with stationary market shares, if brand sales and category sales are cointegrated. To the extent that competitive activities have an effect on market share, an implication of our findings is that these activities may, in general, only have a temporary effect on market share. Finally, we distinguish, from a strategic perspective, between sales and share response at the primary‐demand level (category sales), selective‐demand level (brand sales) and relative‐position level (market share) and identify strategic scenarios depending upon their stable/evolving nature. Copyright © 2000 John Wiley & Sons, Ltd.     

Product balancing under conditions of quality inflation,cost pressures and growth strategies

This paper analyzes an organization that has a well-defined strategy providing a sustainable competitive advantage. This advantage is expressed by at least one dimension of quality on which the product or service exhibits outstanding performance. Using decreasing and increasing exponential demand functions for price and quality, respectively, the optimal quality level is characterized when dollar sales volume (under a cost-based price floor) and profit are maximized. However, as quality inflates, the same quality performance is worth less tomorrow than today. This paper shows that continuous and simultaneous improvement of operational efficiency and quality is a must and is independent from price setting policies. The condition of optimal trade-offs among quality dimensions is found for the case when the company competes on multiple quality dimensions. Finally, the conditions are analyzed when the resources of quality are utilized in other market segments as well. It is found that the corporate level quality (or the utilization level of resources) is lower (higher) than the highest (least) individual business unit (product) quality.     

The Application of Discriminant Analysis to the Prediction of Sales Forecast Uncertainty in New Product Situations

Managers' estimates of sales forecast uncertainty for a new product are critical to an effective risk analysis. This research utilizes discriminant analysis to analyze sales forecast errors in past new-product ventures. Using the past ventures, a linear discriminant function is established from relevant market variables by which future ventures may be allocated to one of two populations depending on the probabilities that their sales forecast uncertainty will be low or high.     

The information value of logistics platforms in a freight matching market

The information asymmetry in the freight matching of the long-haul trucking industry usually pushes shippers to join a logistics platform that has better knowledge of truckers’ cost information. A logistics platform that is plugged into a freight transportation system helps shippers overcome their information disadvantage but produces the double marginalization effect. We investigate the equilibrium characteristics of a shipper and logistics platform in the freight matching market and find that the shipper prefers to cooperate with the logistics platform in a small-scale sales market but searches for truckers by himself in a large-scale sales market. We show that the information value of a logistics platform for the freight system consists of two aspects: (i) employ low-cost truckers for the shipper and avoid the shipper’s inefficient expansion of the selling quantity in a moderate-scale sales market with greatly heterogeneous truckers, and (ii) improve both the total profit and social welfare of the freight system in a small-scale sales market. We further find that the shipper’s private information may hurt the logistics platform and the logistics platform can mitigate her double marginalization disadvantage by improving value-added services or lowering the logistics price in a large-scale market. Our findings provide guidelines for the shipper and logistics platform on how to choose the appropriate transportation strategy and employment strategy in different logistics markets.     

考虑海外代购的品牌商定价模型研究

随着海外代购体量的日趋增大,代购带来的低价威胁对于在不同国家不同市场销售产品的公司来说已经成为一个日益严重的问题。同时,代购渠道中假货的问题也愈发严重。因此,在海外代购背景下探究产品定价模型具有必要性。以往研究普遍认为这种未经授权的销售会削减品牌方的利润,但实则不然。基于这一发现,本研究为在两个不同市场销售相同产品但面临代购低价威胁的公司制定考虑代购的市场定价模型。由公司制定两个市场的价格,消费者选择是否从包括代购在内的三个渠道购买产品。推出两个授权市场的最优价格,分析各参数变化对最优价格的影响,并校验最优价格对消费者需求和总利润的影响。模型分析表明,高价市场中有部分消费者需求转向海外代购,同时低价市场的消费者需求也受到了影响,且在一定条件下,提高高价市场的产品定价能够扩大低价市场的需求,从代购的角度解释了现实中需求曲线向上倾斜的现象。此外,两个独立市场之间的价格差距对代购市场的销售也产生了积极影响,并且在某些条件下,增大价格差距可以提高公司的收益水平。随后讨论了一种极端模型和三种扩展模型,通过模型分析表示,扩展后的定价模型也显示出与基础市场模型相似的灵敏度分析结果,同样得到两个市场的价差扩大会导致代购市场的销售额增加的结论,并且在一定条件下,公司的利润更高,增加了结论的可信度。     

Profit maximization from the sales of products which have limited lifetimes in a fixed price market

The optimization of profit resulting from the sales of products which have limited lifetimes is discussed. The factors considered in the analysis are selling price, cost price, disposal price and loss of goodwill. Demand which is considered to be stochastic is represented by an exponential distribution function. It is found that the factors most influential in the determination of expected profit are the cost price to produce the product and the administrative cost involved in the disposal of the product after its useful lifetime has been exceeded.     

质量约束下闭环供应链差异决策研究

针对由一原始设备制造商和一独立再制商所组成的闭环供应链系统,考虑到新品质量水平对独立再制商可回收量的质量约束效应,以及新品与再制品的价格及质量竞争,分别构建了原始设备制造商领导、独立再制商领导、无领导三种不同市场结构下闭环供应链决策模型,探讨了质量约束效应对闭环供应链运营的影响。研究表明:(1)三种市场结构下,新品和再制品两者在“质量水平-价格”两维度均有所差异,且市场地位的不对等有利于产品质量水平的共同提升;(2)质量约束效应的存在会对产品的价格和质量同时产生影响;(3)再制品具有质量劣势,且质量约束效应的增强,再制品质量劣势越大;(4)市场结构的变化及质量约束效应的强弱并不会影响市场总需求量,仅仅会影响成员企业的市场份额;在大多数情况下,消费者对新品需求更为活跃。但当原始设备制造商为市场领导者时,质量约束效应低于一阈值水平时,再制品销量反而高于新品销量;(5)无论从成员个体,还是从供应链整体,原始设备制造商为领导者的市场结构最有效,且新品质量约束效应并不会影响供应链总利润,仅影响成员企业在总利润中的分成;新品质量约束效应的增强更有利于原始设备制造商利润的改善,但同时会损害独立再制商利润。     

基于“进场费+收益共享”契约的供应链协调策略研究

在超市等自助零售环境下,影响产品需求的往往是产品的感知质量,而产品感知质量不仅取决于产品质量水平,还受货架空间展示量的影响。本文基于价格和感知质量依赖的需求函数,分别建立了一体化供应链集中决策模型以及考虑是否存在进场费的寄售契约下零售商主导的Stackelberg博弈模型,研究了制造商和零售商的产品定价和货架空间展示策略,并给出了进场费+收益共享的供应链协调策略。研究结果表明分散供应链环境下产品的最优零售价格并不总高于集中决策下产品的最优定价,也就是说提升感知质量在一定程度上可以缓解双重边际效应。另外,收取进场费的收益共享模式可以实现供应链的完美协调,这在理论上说明了进场费模式在一定的市场环境下是合理的。     

Contract type and decision right of sales promotion in supply chain management with a capital constrained retailer

From the practices of Chinese consumer electronics market, we find there are two key issues in supply chain management: The first issue is the contract type of either wholesale price contracts or consignment contracts with revenue sharing, and the second issue is the decision right of sales promotion (such as advertising, on-site shopping assistance, rebates, and post-sales service) owned by either manufacturers or retailers. We model a supply chain with one manufacturer and one retailer who has limited capital and faces deterministic demand depending on retail price and sales promotion. The two issues interact with each other. We show that only the combination (called as chain business mode) of a consignment contract with the manufacturer’s right of sales promotion or a wholesale price contract with the retailer’s right of sales promotion is better for both members. Moreover, the latter chain business mode is realized only when the retailer has more power in the chain and has enough capital, otherwise the former one is realized. But which one is preferred by customers? We find that the former is preferred by customers who mainly enjoy low price, while the latter is preferred by those who enjoy high sales promotion level.     

A two-person non-zero-sum game model of the world oil market

The world oil market is modelled as a two-person non-zero-sum game in normal form with each player having a continuum of strategies. The two players are the oil importing nations (OPIC) and the oil exporting nations (OPEC). The game is solved in the noncooperative sense using the equilibrium point solution concept due to Nash. The Nash equilibrium point solution yields an analytic expression for the optimal price per barrel of oil for OPEC and the optimal level of imports of oil for OPIC assuming noncooperation between the players. The cooperative solution to the game is also investigated using the von Neumann-Morgenstern negotiation set solution and Nash's bargaining point solution. Again, we give analytic expressions for the optimal price of a barrel of oil and the optimal level of imports of oil assuming that the players cooperate (negotiate, bargain, etc., for a binding agreement) in arriving at a solution.     

A fuzzy attractiveness of market entry (FAME) model for market selection decisions

A Fuzzy Attractiveness of Market Entry (FAME) model is developed to address the decision-making problem of product introduction into alternative markets. FAME is a market entry selection model that is specifically designed to handle situations when information is limited and/or ambiguous, and a high level of uncertainty exists. As such, the FAME model is an easy to implement tool that supports a reasoning approach to market selection decisions. The model uses expert opinions regarding four factors: (1) fit of the firm's marketing mix in each market; (2) the fit of its key competitor's marketing mix in each market; (3) environmental conditions in each market; and (4) the strategic importance of each market to the firm. Application of the model algorithm is conducted for a small, Bulgarian winery's market selection decision. Ease of use is relevant for small to mid-size companies since a spreadsheet is sufficient to complete the algorithmic calculations.     

Continuous-time mean–variance portfolio selection with liability and regime switching

A continuous-time mean–variance model for individual investors with stochastic liability in a Markovian regime switching financial market, is investigated as a generalization of the model of Zhou and Yin [Zhou, X.Y., Yin, G., 2003. Markowitz’s mean–variance portfolio selection with regime switching: A continuous-time model, SIAM J. Control Optim. 42 (4), 1466–1482]. We assume that the risky stock’s price is governed by a Markovian regime-switching geometric Brownian motion, and the liability follows a Markovian regime-switching Brownian motion with drift, respectively. The evolution of appreciation rates, volatility rates and the interest rates are modulated by the Markov chain, and the Markov switching diffusion is assumed to be independent of the underlying Brownian motion. The correlation between the risky asset and the liability is considered. The objective is to minimize the risk (measured by variance) of the terminal wealth subject to a given expected terminal wealth level. Using the Lagrange multiplier technique and the linear-quadratic control technique, we get the expressions of the optimal portfolio and the mean–variance efficient frontier in closed forms. Further, the results of our special case without liability is consistent with those results of Zhou and Yin [Zhou, X.Y., Yin, G., 2003. Markowitz’s mean–variance portfolio selection with regime switching: A continuous-time model, SIAM J. Control Optim. 42 (4), 1466–1482].     

Make-or-buy service capacity decision in a supply chain providing after-sales service

We consider a supply chain comprising a manufacturer and a retailer. The manufacturer supplies a product to the retailer, while the retailer sells the product bundled with after-sales service to consumers in a fully competitive market. The sales volume is affected by the retailer’s service-level commitment. The retailer can build service capacity in-house at a deterministic price before service demand is realized, or buy the service from an outsourcing market at an uncertain price after service demand realization. We find that the outsourcing market encourages the retailer to make a higher level of service commitment, while prompting the manufacturer to reduce the wholesale price, resulting in more demand realization. We analyze how the expected cost of the service in the outsourcing market and the retailer’s risk attitude affect the decisions of both parties. We derive the conditions under which the retailer is willing to build service capacity in-house and under which it will buy the service from the outsourcing market. Moreover, we find that the manufacturer’s sharing with the retailer the cost to build service capacity improves the profits of both parties.     

A genetic algorithm for optimal operating parameters of VMI system in a two-echelon supply chain

This paper deals with the operational issues of a two-echelon single vendor–multiple buyers supply chain (TSVMBSC) model under vendor managed inventory (VMI) mode of operation. The operational parameters to the above model are: sales quantity and sales price that determine the channel profit of the supply chain, and contract price between the vendor and the buyer, which depends upon the understanding between the partners on their revenue sharing. In order to find out the optimal sales quantity for each buyer in TSVMBSC problem, a mathematical model is formulated. Optimal sales price and acceptable contract price at different revenue share are subsequently derived with the optimal sales quantity. A genetic algorithm (GA) based heuristic is proposed to solve this TSVMBSC problem, which belongs to nonlinear integer programming problem (NIP). The proposed methodology is evaluated for its solution quality. Furthermore, the robustness of the model with its parameters, which fluctuate frequently and are sensitive to operational features, is analysed.