Author: Ilhan Emre Ertan Publisher: ISBN: Category : Consumer behavior Languages : en Pages :
Book Description
This dissertation includes three essays. The first two essays focus on analyzing consumers’ strategic waiting behavior, and the third essay addresses the differences in consumers’ risk preferences while making decisions for different temporal spots. Due to the long history of markdown applications, in time consumers have built rational expectations from the seller to provide markdown discounts throughout a selling horizon. We investigate the assumption that as rational utility maximizers, consumers act according to maximizing their utility over time. In the first essay, we intend to identify the underlying determinants of consumers’ sequential decision making processes under uncertain product availability. We structure a benchmark optimal purchase timing policy in a market environment, in which a single strategic customer could only follow the markdown pricing scheme, the available inventory level and the remaining time to the end of the selling horizon to maximize his expected surplus from the purchase. In the second essay, we present a set of controlled human subject experiments that investigate how people make purchase timing decisions under product purchase uncertainty. The impact of experiencing Stock Out, when the consumer waits too long and the product is sold out at the retailer and the impact of experiencing Over Pay, when the consumer decides to buy early and finds the product available at a deeper discount later, are analyzed with a unique sequential decision making task through our experimental studies. We identified that human subjects are on average more risk seeking than the analytical model predicts. In the end, we propose a behavioral choice model which incorporates human subjects’ attitudes towards feelings of regret rooted from Stock Out and Over Pay. After observing the impact of risk preferences on consumers’ purchase timing decisions, in the third essay, we look into the human subjects’ attitudes towards making decisions with uncertain outcomes at different time points. We found that consumers show less risk averse risk preference while making decisions for uncertain hedonic products compared to the risk preferences while making decisions for utilitarian products, which is a big contrast to the experimental economics literature. Using subjects’ product consumption size as a co-variate sheds light onto our analysis, indicating the importance of motivational control in eliciting risk preferences when using primary rewards as the incentive mechanism for risk preference elicitation experiments.
Author: Nikolay Osadchiy Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
In the wake of recent literature on revenue management with strategic consumer behavior, we report the results of a new experimental study. The experiment considers the strategic and bargain-hunting behavior of decision makers faced with buy-now vs. wait decisions, in a retail markdown pricing context. We test whether the consumer behavior is consistent with the discounted expected utility model (DEU), or with its modified version that accounts for the individual perception of risk associated with the wait option. After controlling for risk perceptions, we find that 77% of subjects are forward-looking, and 36% of them correctly perceive the future availability risk. In addition, more subjects adopt the forward-looking strategy if they are explicitly given the probability of obtaining the item in the wait option. However, if only a proxy for the probability of availability is provided, 26% of subjects underestimate the risk. Such bargain-hunting behavior can hinder efficiency of price discrimination and adversely impact retailers' revenue. The impact can be mitigated by providing consumers with the future item availability information. We estimate the benefit of such efforts to be approximately 2.6% of revenue.
Author: Jun Li Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Many consumers have learned to delay purchases, anticipating that prices might decrease. Such strategic or forward-looking behavior has attracted increasing attention from various disciplines, including operations management, information systems, marketing, and economics. However, there is currently limited empirical evidence of the extent to which this strategic purchasing actually takes place. Combining two unique data sources from the air-travel industry (posted fare data and booking data), we use a structural model to estimate the fraction of strategic consumers in the population, assuming di erent levels of sophistication in consumers' perception of future prices: perfect foresight and weak- and strong-form rational expectations. We nd that 5.2% to 19.2% of the population is strategic across markets, measured by the rst and third quartiles. Our inter-market analysis indicates that shorter trips with alternate modes of transportation have a higher proportion of strategic consumers. Using a non-parametric approach, we further nd that most strategic consumers arrive either at the beginning of the booking horizon or close to departure. Finally, our counterfactual analysis shows that, contrary to conventional wisdom, the presence of strategic consumers does not necessarily hurt revenues. Rather, the impact varies by market. Commitment to a non-decreasing pricing strategy is more likely to bene t business markets than leisure markets and it could even hurt leisure markets. Inter-market analysis shows that city-pairs with lower internet penetration, higher average price and shorter distances tend to bene t more from such commitment as well.
Author: So Yeon Chun Publisher: ISBN: Category : Languages : en Pages : 46
Book Description
We study the interaction between the design of a premium-status loyalty program, revenue management, and strategic consumer behavior. Specifically, we consider a contemporaneous change where firms across several industries switch their loyalty programs from quantity-based to spending-based designs. This change has been met with fierce opposition from the media and consumers. We present a model for strategic, forward-looking, and status-seeking consumers' decisions on how much to purchase over a certain time period, and endogenously derive strategic consumer demand as a function of the firm's prices and loyalty program decisions. We then incorporate such demand into the firm's pricing and loyalty program design problem and compare different loyalty program designs. We identify the conditions under which, by coordinating pricing and loyalty decisions, the firm can benefit from strategic consumer behavior, and show that by switching to a spending-based design, the firm can benefit from strategic behavior even more, under broader conditions, and in a Pareto-improving way. We also analyze combined designs, which utilize quantity and/or spending requirements, and provide additional insights on how the firm can better manage the transition toward spending-based designs, possibly minimizing negative consumer reactions.
Author: Colin Campbell Publisher: Springer ISBN: 3319241842 Category : Business & Economics Languages : en Pages : 955
Book Description
This volume includes the full proceedings from the 2013 World Marketing Congress held in Melbourne, Australia with the theme Looking Forward, Looking Back: Drawing on the Past to Shape the Future of Marketing. The focus of the conference and the enclosed papers is on marketing thought and practices throughout the world. This volume resents papers on various topics including marketing management, marketing strategy, and consumer behavior. Founded in 1971, the Academy of Marketing Science is an international organization dedicated to promoting timely explorations of phenomena related to the science of marketing in theory, research, and practice. Among its services to members and the community at large, the Academy offers conferences, congresses and symposia that attract delegates from around the world. Presentations from these events are published in this Proceedings series, which offers a comprehensive archive of volumes reflecting the evolution of the field. Volumes deliver cutting-edge research and insights, complimenting the Academy’s flagship journals, the Journal of the Academy of Marketing Science (JAMS) and AMS Review. Volumes are edited by leading scholars and practitioners across a wide range of subject areas in marketing science.
Author: Andrew T. Ching Publisher: ISBN: Category : Languages : en Pages : 56
Book Description
Understanding how forward-looking consumers respond to price promotions in storable goods markets is an important area of research in empirical marketing and industrial organization. In prior work, researchers have assumed that consumers in these markets are very forward-looking, and calibrated their weekly discount factors to levels around 0.9995. This calibration has been used because earlier research has assumed that a consumer's storage cost is a continuous function of inventory, which rules out exclusion restrictions that can be used to identify the discount factor. We show that by properly modeling storage cost as a step function of inventory (because storage cost depends on the number of packages stored, instead of the actual amount of inventory), natural exclusion restrictions arise that allow for the discount factor to be point identified. In an application to a storable good category, we find that weekly discount factors are very heterogeneous across consumers, and are on average 0.71. We show through a counterfactual exercise that if one used a model which fixed the discount factor to be consistent with the standard calibrated value, one would overpredict the effect of increased promotional depth for a product on its quantity sold by 18% in the short-term, and 15% in the long-term.
Author: Angeline Close Scheinbaum Publisher: Routledge ISBN: 1136342214 Category : Business & Economics Languages : en Pages : 402
Book Description
Social media (e.g., Facebook, LinkedIn, Groupon, Twitter) have changed the way consumers and advertisers behave. It is crucial to understand how consumers think, feel and act regarding social media, online advertising, and online shopping. Business practitioners, students and marketers are trying to understand online consumer experiences that help instill brand loyalty. This book is one of the first to present scholarly theory and research to help explain and predict online consumer behavior.
Author: Greg H. Parlier Publisher: Springer Nature ISBN: 3030375846 Category : Computers Languages : en Pages : 198
Book Description
This book constitutes revised and selected papers from the 8th International Conference on Operations Research and Enterprise Systems, ICORES 2019, held in Prague, Czech Republic, in February 2019. The 9 extended and revised papers presented in this volume were carefully reviewed and selected from a total of 80 submissions. They were organized in topical sections named methodologies and technologies and applications.
Author: Ilhan Emre Ertan
Author: Nikolay Osadchiy
Author: Jun Li
Author: So Yeon Chun
Author: Federico Rossi
Author: Colin Campbell
Author: Andrew T. Ching
Author: Angeline Close Scheinbaum
Author: Inseong Song
Author: Greg H. Parlier