Competitive Delivered Pricing by Mail-Order and Internet Retailers

Mail-order and internet sellers must decide how customers pay shipping charges. Typically, these sellers choose between two pricing policies: either “uniform pricing,” where the firm delivers to any customer at a fixed delivery charge (that may be volume dependent), or “mill pricing,” where the firm bills the customer a distance-related shipping charge. This paper studies price competition between a mail-order (or internet) seller and local retailers, and the mail-order firm’s choice of pricing policy. The price policy choice is studied when retailers do not change price in reaction to the mail-order firm’s policy choice, and when they do. In the second case, a two-stage non-cooperative game is used and it is found that for low customer willingness to pay, mill pricing is favored but as willingness to pay rises, uniform pricing becomes more attractive. These results are generalized showing that larger markets, higher transportation rates, higher unit production cost, and greater competition between retailers all increase profit under mill pricing relative to uniform pricing (and vice versa). On the other hand, cost asymmetries that favor the mail-order firm will tend to induce uniform rather than mill pricing. Some empirical data on retail and mail-order sales that confirm these results are presented.     

再多一次接触:顾客反馈机制对服务失败后顾客评价的影响

It is difficult to control service quality for any service firm and service failure is inevitable due to human or non-human factors. As a result, service recovery stirred the interest of researchers and practitioners. However, service failure may not be identified by firms because a majority of dissatisfied customers will not complain to the service provider. Thus, this research proposes a proactive customer feedback mechanism comprised of proactive solicitation of customer feedback, customers providing feedback and follow-up communication and examine their impact of customer evaluations in the context of service failure. This research tries to establish that through adding a continuous series of satisfied service encounters or "moment of truth" to service failure encounters, the customer evaluations (e.g. satisfaction, trust, purchase intent and positive WOM) toward the service will be significantly improved. Our research employed a 2×2×2 between subjects experimental design. Three independent variables were manipulated as presence and absence level, that is, firms either proactively solicitted customer feedback or employed no solicitation of feedback, Customers either provided feedback to the service firm or refused to provide feedback, and service firm either conducted follow-up communication or no follow-up communication. Our research adoptted a scenario in the context of patronizing a three-star hotel on a business trip. In total, 221 business administration graduates from a famous university in Shanghai participated in the experiment. MANOVA was used to test the hypotheses. The results indicated that proactive solicitation significantly influenced trust (p<0.01). Besides satisfaction, the other dependent variables such as trust, purchase intent and positive WOM significantly differred between with and without follow-up communication groups (p<0.05). Third, a significant difference was detected regarding satisfaction, trust, purchase intent and positive WOM between customer providing feedback groups and no customer feedback groups (p<0.05). Moreover, significant interactive effects were found of customers provided feedback and follow-up communication on trust and purchase intent. Trust and purchase intent reached highest when a follow-up communication occurred after customers provided feedback. However, no interactive effects were found of proactive solicitation of customer feedback and customer providing feedback. This research suggests that service providers should create new encounters with customers when they are confronted with service failure, and in this study, through proactive customer feedback mechanism. That is, first, the service provider should encourage customers to provide feedback, which can improve customer evaluations after service failure and after customers providing feedback. At the same time, the firm should employ follow-up communication with the customer and inform them about how the firm responded to their complaints, suggestions and comments. It is worth to note that companies just need to have follow-up communication with those customers who have provided feedback. More important, as information technology and internet prevails, it is very likely sending email and short messages after a service failure to maintain customer relationships could significantly enhance customer evaluations of the service provider. Of course, how consumers respond to such measures online is an promising research area and needs further investigation.     

Information security in networked supply chains: impact of network vulnerability and supply chain integration on incentives to invest

Recent supply chain reengineering efforts have focused on integrating firms’ production, inventory and replenishment activities with the help of communication networks. While communication networks and supply chain integration facilitate optimization of traditional supply chain functions, they also exacerbate the information security risk: communication networks propagate security breaches from one firm to another, and supply chain integration causes breach on one firm to affect other firms in the supply chain. We study the impact of network security vulnerability and supply chain integration on firms’ incentives to invest in information security. We find that even though an increase in either the degree of network vulnerability or the degree of supply chain integration increases the security risk, they have different impacts on firms’ incentives to invest in security. If the degree of supply chain integration is low, then an increase in network vulnerability induces firms to reduce, rather than increase, their security investments. A sufficiently high degree of supply chain integration alters the impact of network vulnerability into one in which firms have an incentive to increase their investments when the network vulnerability is higher. Though an increase in the degree of supply integration enhances firms’ incentives to invest in security, private provisioning for security always results in a less than socially optimal security level. A liability mechanism that makes the responsible party partially compensate for the other party’s loss induces each firm to invest at the socially optimal level. If firms choose the degree of integration, in addition to security investment, then firms may choose a higher degree of integration when they decide individually than when they decide jointly, suggesting an even greater security risk to the supply chain.     

Competitive Pricing Strategies for Software and SaaS Products

We study the pricing strategies for a software firm and an entrant software-as-a-service (SaaS) firm in two customer markets: the market composed of the incumbent’s past customers and the market of new customers. We build a game theoretical model to investigate how user costs and the quality differential between products affect firms’ pricing in different customer markets. Our findings show that it is not always optimal for the software firm to price discriminate between its old users and the new customers. The entrant firm would be better off acquiring only the new customers when the SaaS quality is sufficiently low.     

A comparison of purchase decision calculus between potential and repeat customers of an online store

Potential and repeat customers of an online store possess different amount of information and use different criteria for making purchase decisions. Internet vendors should therefore adopt different sales strategies for creating initial sales and generating repeat sales. Yet little is known about the differences in online purchase decision making between the two customer groups. This study examines the differences between potential and repeat customers based on mental accounting theory and information processing theory. We found that value perception (of transactions made with the online vendor) as an overall judgment for decision making is more strongly influenced by the non-monetary (perceived risk) factor than by the monetary factor (perceived price) for potential customers, whereas it is more strongly influenced by the monetary factor than by the non-monetary factor for repeat customers. The findings of our study would help Internet vendors develop customized strategies for creating initial sales and repeat sales.     

Which is more important in Internet shopping,perceived price or trust?

Price and trust are considered to be two important factors that influence customer purchasing decisions in Internet shopping. This paper examines the relative influence they have on online purchasing decisions for both potential and repeat customers. The knowledge of their relative impacts and changes in their relative roles over customer transaction experience is useful in developing customized sales strategies to target different groups of customers. The results of this study revealed that perceived trust exerted a stronger effect than perceived price on purchase intentions for both potential and repeat customers of an online store. The results also revealed that perceived price exerted a stronger influence on purchase decisions of repeat customers as compared to that of potential customers. Perceived trust exerted a stronger influence on purchase decisions of potential customers as compared to that of repeat customers.     

Analysis of two-tier public service systems under a government subsidy policy

Some public service systems such as healthcare systems consist of both free public service provider with a long wait time and paid private service provider with a short wait time. Such service systems are often called a two-tier service system. In general, more customers will choose the free service provider (SP). To reduce the congestion in the free system, the government may encourage customers to use the pay system by offering them a subsidy. This paper studies whether such a subsidy can reduce the free system’s waiting time and improves the social welfare. While the objective of the free system is to maximize its own total customers’ utility, the objective of the pay system is to maximize its profit. We develop a mixed duopoly game to analyze the Nash equilibrium for the competition between the free and toll systems. Two scenarios with unregulated and regulated prices are considered. When the pay system price is unregulated (the private SP can set prices freely), we find that if customers are less sensitive to the service delay, the subsidy policy can effectively reduce the expected waiting time for the free system and increase the customer utility surplus of the entire two-tier system. However, if customers are more sensitive to the service delay, the subsidy policy may have the opposite effect. When the pay system price is regulated (the price determined by government), the subsidy policy can effectively reduce the expected waiting time for the free system and improve the social welfare of the two-tier system. And there exists an optimal regulated price to maximize the social welfare of the entire public service system.     

基于改进RFM模型的电子商务客户细分

对电子商务企业的客户进行准确细分,采取相应的营销策略,是电子商务发展的重要环节。在传统零售行业客户细分的RFM模型上,引入总利润属性,创建RFP模型,使用数据挖掘K-Means算法对某电子商务企业客户进行聚类分析,与RFM模型比较,并分析了模型属性的关联性对聚类结果的影响,得出了模型比较的六个结论和四个营销策略,能为电子商务行业以及其他销售行业提出相关营销策略。     

Adopting television as a new channel for e-commerce. The influence of interactive technologies on consumer behavior

The aim of this research is twofold. Firstly, it analyzes how the two main features of Internet Protocol Television (IPTV), interactivity and personalization, influence both customers’ perceived performance and involvement with a web-based information service. Secondly, it studies whether personalization and interactivity improve customer purchase intentions of this service through IPTV. We developed a 2×2 between-subjects factorial design and applied MANOVA analyses. Findings verify that interactivity and personalization foster customer involvement with the service, perceived performance of IPTV and purchase intentions. Moreover, interactivity promotes the effect of personalization on perceived performance and customer involvement. This research concludes that customers’ involvement and purchase behavior are not derived exclusively from their relationship with the firm, but also from connections established in the channel with other customers. Customers also appreciate participating in the service provision process, so firms should promote personalization activities during the purchase in order to improve customers’ performance evaluation.     

Beziehungsmarketing aus Kundensicht

Relationship Marketing from a Customer’s Perspective Companies need a wealth of personal data in order to address customers in a targeted manner. Utilizing IT enables them to directly address customers in order to increase sales by improving customer retention. The use of personal data becomes problematic when customers decline the use of their data. If companies ignore their customers’ privacy preferences, their chances of retaining them with targeted offers decline. In this paper, we first identify opportunities and drawbacks of individualization measures from a customer’s perspective based on the findings of a qualitative survey. The results of a quantitative survey illustrate how people’s general attitude toward personal data transmission determines their perception of personalization measures.

Engereicht am 2006-05-12, nach fünf überarbeitungen angenommen am 2006-10-15 durch die Herausgeber des Schwerpunktthemas.     

Digital bundling

Increasingly, we see that firms offer many items on information-intensive channels and the Internet. Especially with low-marginal-cost digital goods, bundling may be a beneficial strategy. Different bundles may help customers become more discriminating and maximize profits. However, the marketplace evidence provides mixed observation of bundling rigorously pursued. In this study, we provide a general framework to analyze when and how bundling may be beneficial. We compare and contrast the firm and customer characteristics on bundling strategy. We analyze when individual sales can be beneficial. We find that when costs do not increase relative to the bundle valuation, firms find it beneficial to limit the number of bundles offered in the market. A low (zero) marginal cost firm benefits from offering just one big bundle. Such a firm obtains a higher profit compared to a firm that offers many bundles. With high marginal costs, the number of bundles increases with increasing customer valuation and/or heterogeneity. When a firm offers all the bundles, prices and profit increase as customer heterogeneity and valuation increase. When the number of offered items is high, individual sale (unbundling) may be preferred over bundling and bundling becomes an inferior strategy. Interestingly, a firm may benefit from unbundling the items when customers have higher valuations.     

基于客户喜好的双向个性化推荐算法

为了解决现有推荐算法仅考虑同类产品间单向推荐所缺乏的灵活性,提升产品的销量及用户的购物体验,提出一种基于客户喜好的双向个性化推荐算法,不仅可以为客户精准推荐产品,还可以为商家推荐潜在客户.首先,基于产品购买网络中客户及其邻居的购买信息,扩展客户购买信息;其次设计客户产品喜好权重计算办法,分析客户的购买喜好,并在客户喜好的指导下为客户提供个性化的产品推荐;最后,基于商家提供的样本客户,挖掘与样本客户相似的客户构成社区,为商家提供潜在客户推荐以及精准客户维护.在真实数据集上的实验验证了算法的有效性.该算法从客户和商家两个维度出发实现了产品与客户的双向推荐,为个性化推荐领域的研究提供有益的帮助.     

Trust perceptions of online travel information by different content creators: Some social and legal implications

Consumers are increasingly turning to the online environment to provide information to assist them in making purchase decisions related to travel products. They often rely on travel recommendations from different sources, such as sellers, independent experts and, increasingly, other consumers. A new type of online content, user-generated content (UGC), provides a number of legal and social challenges to providers and users of that content, especially in relation to areas such as defamation, misrepresentation and social embarrassment. This paper reports research that examined the level of trustworthiness of online travel information from these different sources. The study used a survey of Australian travel consumers (n = 12,000) and results support the notion that there are differences in the level of trust for online travel information from different sources. Respondents ‘tended to agree’ that they trusted information provided by travel agents, information from commercial operators and comments made by travellers on third party websites. However, the highest level of trust was afforded to information provided on State government tourism websites. These results suggest that greater trust is placed in online travel comments when they are on a specific travel website than when they are on a more generic social networking website. However, respondents were ‘not sure’ that they trusted comments made by travellers on weblogs and on social networking sites. Some 88% of respondents that had not visited UGC websites (or were unsure if they had) indicated that they thought that UGC would be useful in the future – suggesting that they feel that any concerns they may have in relation to legal and social problems resulting from its use will be resolved.     

考虑仿冒商威胁的正品制造商销售模式选择策略

针对仿冒商进入市场引起的消费者权益难以保证,正品市场份额被抢占,正常的市场秩序受到破坏等问题,在考虑同时受欺骗型和非欺骗型仿冒商威胁的情形下,正品制造商通过零售商进行转售或自有渠道直销的两种销售模式,建立Stackelberg博弈对比研究正品制造商的两种销售模式的均衡结果,分析正品制造商的销售模式选择策略,探讨其销售模式选择策略对两类仿冒商的打击效果以及对消费者剩余和社会福利的影响.研究结果表明:正品制造商可能不会为了维护消费者利益而选择直销模式;正品制造商选择直销模式的意愿随消费者在转售模式下对正品和欺骗型仿冒品的感知质量及欺骗型仿冒品质量的提高而减小,随非欺骗型仿冒品质量的提高而增大;正品制造商选择直销模式总能有效打击非欺骗型仿冒商,然而,对欺骗型仿冒商而言,在一定条件下,正品制造商会选择转售模式并容忍欺骗型仿冒商的存在;正品制造商选择直销模式能够提高消费者剩余和社会福利.     

Cash-back rewards versus equity-based electronic loyalty programs in e-commerce

Loyalty is a crucial part of today’s business because retaining a customer is generally less expensive than attracting a new one. This relationship also holds true in e-commerce. Most of the e-loyalty programs available on the Internet utilize cash-back rewards. A new type of e-loyalty program in which customers are offered a fraction of merchant firm’s equity is emerging recently. The profitability of this approach versus cash-back reward programs is still an open question. In this paper, we first survey current e-loyalty programs, and then develop a two-period duopoly model in which one of the firms gives customers a small fraction of its equity and the other offers cash-back reward for a purchase. We derive analytical conditions to compare the total profits generated through each loyalty program. In particular, we find that equity-based e-loyalty programs provide higher total profits than those of cash-back programs in markets where it is difficult for customers to switch between firms. We are grateful for the valuable comments and suggestions by the participants of the AMCIS 2004 Doctoral Consortium, New York City; the Big Ten IS Research Consortium 2004 at the Michigan State University; EURO/INFORMS 2003, Istanbul, Turkey; WISE 2002, Barcelona, Spain; and ICTEC 2002, Montreal, Canada. We are also indebted to the faculty at the Krannert Graduate School of Management for their indispensable inputs.     

Perceived derived attributes of online customer reviews

The influence of online customer reviews (OCRs) on customers' purchase intention has recently gained considerable attention, in both academic and business communities. Technology allows customers to freely and easily post their comments and opinions online about any product or service; this type of customer review can have a significant effect on customers' purchase decisions. Previous studies, however, have mainly focused on the influence of the virtual attributes of OCRs such as volume and valence on consumers' intentions, while limited attention has been paid to understanding the effects of the derived attributes. This study, thus, aims to understand the impact of the perceived derived attributes of OCRs on customer trust and intention. This study develops a – Perceived Derived Attributes (PDA) - model, based on the inclusion of perceived control from the Theory of Planned Behaviour (TPB) with the Technology Acceptance Model (TAM), in order to investigate the effects of OCRs on customers’ purchasing intention. A total of 489 responses to a survey were collected from users of amazon.com. The findings from this study suggest that customer trust in an e-vendor and their intention to shop online are significantly affected by perceived usefulness, perceived ease of use and perceived enjoyment of OCRs. Furthermore, the sense of control derived from OCRs significantly affects customer intention and significantly affects customer trust in e-vendors, particularly for customers who frequently check OCRs before making a purchase. Clearly, those attributes of OCRs are linked to the development of the shopping environment, which consequently can affect sales.     

Selling luxury fashion to conspicuous consumers in the presence of discount sensitivity behavior

In the luxury fashion industry, with the possibility of stockout, conspicuous consumers may purchase products at the full price rather than wait for any potential discount. However, in the presence of a possible future discount, conspicuous consumers may also feel regret to purchase at the full price if they find that the product is still available at the markdown price. Considering the possible stockout and future discount, in this paper, we evaluate the firm's pricing and production decisions on conspicuous consumers in the presence of discount sensitivity behavior. We build up an analytical model and consider that the customer purchasing utility decreases with discount sensitivity if she/he purchases at the full price. The firm can create scarcity in the market by reducing inventory to induce customers to purchase early. If the fraction of the customers with discount sensitivity is lower than a certain level, the firm should intentionally produce a large amount of products. Moreover, we find that product design enhancement can effectively weaken the negative effects of customer discount sensitivity on the quantity decisions. More managerial insights are discussed.     

Using online pickup site inclusion policies to manage demand in retail/E-tail organizations

A major development in online retailing is the significant increase in the number of traditional “offline” retailers extending their brands online. Many of these retail/e-tail firms are attempting to leverage channel synergies by allowing customers to purchase products over the internet and then pick their orders up at one of the firm's local stores. This paper proposes that the firm presents only a subset of its stores to online customers as available pickup locations, rather than simply listing all local stores with inventory. By doing so, the firm can protect stores with critically low inventory levels and thereby reduce backorder costs. Specifically, we develop and evaluate a dynamic pickup site inclusion policy that incorporates real-time information to specify which of the firm's e-fulfillment locations should be presented at online checkout. Computational results indicate that managing in-store demand via such policies can decrease total cost (holding, backorder, and lost or redirected pickup sale costs) by as much as 18% over allowing customers to pick online orders up from any site with available inventory. The percentage of pickup sales and customers' sensitivity to travel are critical in determining the magnitude of the benefit.     

Towards Circular Economy implementation: an agent-based simulation approach for business model changes

This paper introduces an agent-based approach to study customer behavior in terms of their acceptance of new business models in Circular Economy (CE) context. In a CE customers are perceived as integral part of the business and therefore customer acceptance of new business models becomes crucial as it determines the successful implementation of CE. However, tools or methods are missing to capture customer behavior to assess how customers will react if an organization introduces a new business model such as leasing or functional sales. The purpose of this research is to bring forward a quantitative analysis tool for identifying proper marketing and pricing strategies to obtain best fit demand behavior for the chosen new business model. This tool will support decision makers in determining the impact of introducing new (circular) business models. The model has been developed using an agent-based modeling approach which delivers results based on socio-demographic factors of a population and customers’ relative preferences of product attributes price, environmental friendliness and service-orientation. The implementation of the model has been tested using the practical business example of a washing machine. This research presents the first agent-based tool that can assess customer behavior and determine whether introduction of new business models will be accepted or not and how customer acceptance can be influenced to accelerate CE implementation. The tool integrates socio-demographic factors, product utility functions, social network structures and inter-agent communication in order to comprehensively describe behavior on individual customer level. In addition to the tool itself the results of this research indicates the need for systematic marketing strategies which emphasize CE value propositions in order to accelerate customer acceptance and shorten the transition time from linear to circular. Agent-based models are emphasized as highly capable to fill the gap between diffusion-based penetration of information and resulting behavior in the form of purchase decisions.