Entwicklungsökonomik

Web-based knowledge management in product concept development: the DELI approach

Description: 

In this paper, we describe DELI ("Development Interactive"), a method and software system that supports the product concept development phase by multi-functional product development teams using Marketing Engineering methods. After motivating our research, we present core concepts underlying DELI: a data model encompassing customer and product attributes and preferences as well as a questionnaire generating tool based thereon, a novel integrated clustering and attribute/product positioning algorithm for market map generation and a conjoint-based market simulation component. All concepts are explained using a real-world mobile phone case study.

A dynamic segmentation approach for targeting and customizing direct marketing campaigns

Description: 

An important aspect of customer relationship management is the targeting of customer segments with tailored promotional activities. While most contributions focus on the selection of promising customers for targeting, only few authors address the question of which specific differential offers to direct to the selected target groups. We focus on both issues and propose a flexible, two-stage approach for dynamically deriving behaviorally persistent segments and subsequent target marketing selection using retail-purchase histories from loyalty-program members. The underlying concept of behavioral persistence entails an in-depth analysis of complementary cross-category purchase interdependencies at a segment level. The effectiveness and efficiency of the proposed procedure are demonstrated in a controlled field experiment involving the targeting of several thousands of customers enrolled in the loyalty program of a “do-it-yourself” retailer. Our empirical findings provide evidence of significant positive impacts on both profitability and sales for segment-specific tailored direct marketing campaigns.

An encompassing view on markdown pricing strategies: an analysis of the austrian mobile phone market

Description: 

Fierce competition and rapid technological progress have considerably reduced the life cycle length for mobile phones in the last decade. Once a new mobile phone is launched, providers on the market under consideration practice a markdown strategy. Profits of the providers are generated mainly via the monthly (base plus variable) fees accruing during contract duration whereas the mobile phones are over large parts of their life cycle sold below the constant purchase price charged by the OEM supplier. The problem of applying such markdown strategies has recently been further emphasized by an increased competition among the providers cutting back revenues generated by the contracts. Although providers frequently complain about this situation of pre- and cross financing the mobile phones, none of them has yet risked stopping the practiced markdown pricing strategies. In our contribution, we investigate a new model for the analysis of the effects of alternative (markdown) pricing strategies. Building on previous research that has investigated the dynamics and feedbacks between pricing and inventory decisions caused by delays and inaccurate forecasts, we develop a more encompassing view on the market considering the dependency and dynamics between customer satisfaction, loyalty, and repeat purchase rates. Furthermore, we explicitly model price and reference price effects and their impact on the attraction of new customers. Various data sources are employed to calibrate a system dynamics model for one of the providers and its interrelation with a typical supplier and the customers. Our model indicates that a reduction of the currently practiced markdown strategy would reduce the provider’s overall profit for contract customers. In contrast, the results for prepaid customers could be improved by a careful reduction of markdowns.

An assortment-wide decision-support system for dynamic pricing and promotion planning in DIY retailing

Description: 

The main objective of this report is to describe a decision-support system for dynamic retail pricing and pro-motion planning. Our weekly demand model incorporates price, reference price effects, seasonality, article availability information, features, and discounts. Building on previous research, we quantify demand interdependencies and integrate the resulting profit-lifting effects into the optimal pricing model. The methodology was developed and implemented at bauMax, an Austrian do-it-yourself retailer. Along with the practical requirements, an objective function was employed that can be used as a vehicle for implementing a retailer’s strategy.
Eight pricing rounds with thousands of different stock-keeping units have each served as a testing ground for our approach. Based on various benchmarking methods, a positive impact on profit was reported. The currently implemented marketing decision-support system increased gross profit on average by 8.1 and sales by 2.1%.

How storefront displays influence retail store image

Description: 

The image of retail stores offers an important means for differentiation in highly competitive retail markets. Storefront displays generally function to increase attention to the store or generate unplanned store visits, whereas their impact on store image remains unknown. This study therefore investigates perceived image differences between commonly used types of storefront displays and tests whether an image transfer takes place from the display to the retail store. The results show that more innovative displays achieve better image valuations and that store image benefits from the presence of a storefront display. Spillover effects from the display to the store even occur in the face of some resistance, such as in familiar stores and among consumers who have negative attitudes toward such displays.

Kish - where customers pay as THEY wish

Description: 

New restaurants often do not manage to succeed within a reasonable amount of time. Exotic restaurants especially face the problem that price promotions may not attract new customers because prospective customers might associate very low prices for unfamiliar food with a high
functional risk. This paper describes how Pay-What-You-Want (PWYW), a new pricing mechanism, was successfully implemented at Kish, a moderately priced Persian restaurant in downtown Frankfurt. After the initial testing phase, which had the characteristics of a promotional offer, the
restaurant decided to permanently offer its buffet lunch under PWYW conditions. We report the long-term effects of this decision as well as a simulation demonstrating that profitability is mainly based on ‘trading up’ the continuous inflow of new customers to the more profitable dining offer where prices are fixed.

New metrics for evaluating preference maps

Description: 

Preference maps provide a visual representation of market structure, usually depicting brand or product alternatives, product attributes, and customers in a single graphic. Using measures of consideration and attribute sets to establish criterion validity, we develop a set of metrics that can be interpreted by managers and that allow managers to evaluate maps based on their ability to accurately represent market structures for products, attributes, and consumers. Using a Monte Carlo simulation, we test the stability of the metrics for a variety of scenarios and compare them to statistical stress. Our results show that the metrics can help identify specific sources of noise and can therefore be used to interpret map fit at a more disaggregated level than stress. We apply the metrics on an empirical example and use them to develop a reweighted map for a focal product.

Geographical Information Systems–based marketing decisions: effects of alternative visualizations on decision quality

Description: 

Data visualization aids have become popular tools to assist managerial decision making in marketing. For example, Geographical Information Systems (GIS) are often used to identify suitable retail locations, regional distributions for advertising campaigns, or targeting of direct marketing activities. GIS-based visualizations facilitate the assessment of store locations and help planners to select the most promising options. The selection of the best alternative requires a “visual optimization” which is typically supported by GIS–thematic maps. In an online experiment, we investigate the way how different GIS-based data representations influence marketing analysts’ decision making styles. Our results show that GIS-maps are a relevant part of the task environment and that the type of map visualization influences the activated decision processes. The invoked decision process is also shown to depend on the way symbol overload is handled by GIS-maps. We further find that analysts’ decision processes vary under time pressure and also relate to personal characteristics.

Managerial applicability of graphical formats to support positioning decisions

Description: 

Issues of segmentation and positioning have always been at the heart of marketing management. In recent years, much methodological progress has been made in order to carry out these two tasks simultaneously, that is, to combine certain types of clustering algorithms with appropriate multidimensional scaling or unfolding procedures. When trying to provide managers with a tool to support marketing decision-making in segmentation and positioning, the ease of use and the visual quality of results must be emphasized. This paper provides a state-of-the-art review of alternative graphical formats designed to assist strategic management. It focuses on three aspects, namely, (I) representing competitive market structures, (II) illustrating preferences for product attributes, and (III) describing customer heterogeneity at the individual as well as segment-specific levels; this paper also explores the interrelations among these aspects. The benefits and limitations of different approaches are discussed, and graphical examples are provided. Advances in academic research are contrasted with the information requirements of marketing managers. Finally, recommendations on the applicability of these alternatives for practical use are offered, and issues for further research are specified.

Do price charts provided by online shopbots influence price expectations and purchase timing decisions

Description: 

Online price comparison sites (shopbots) like PriceGrabber.com are the most powerful tools for consumers to easily compare prices and find offers for desired products. Besides providing distributions of actual prices in price comparison tables, shopbots like NexTag.com have recently introduced price charts (line charts) displaying a product's full price history. Price charts should support consumers in forming expectations about future prices. Nevertheless, it is currently unclear how price charts influence consumer price expectations and purchase decisions. The results of this study show that the provision of past prices leads to strong adjustments of price expectations depending on price chart characteristics. In particular, the trend, variance and range of past prices in the chart strongly affect price expectations and purchase timing decisions. Furthermore, in the case of a strong downward trend and high variance in past prices, results show that nearly 50% of the total effect is caused by the visualization of the price history.

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