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FEATURES / [Business Models] How to Turn Professional Services Into Products Product-based business models can help services firms achieve greater scale and profitability. But the transformation can be challenging. By [...]

Although brands increasingly disseminate their brand biographies through brand sources, this research shows that this practice can decrease brand attitudes and consumer preferences. A brand source activates consumers' persuasion knowledge, increasing negative thoughts and impeding narrative transportation into the brand biography. This research furthermore demonstrates that the negative impact of a brand source in the dissemination of brand biographies depends on self-congruence, such that a detrimental effect on consumer attitudes and preferences occurs when the brand biography is incongruent with consumer's self-concept, but is mitigated when the brand biography is self-congruent. These findings suggest that the dissemination of brand biographies by brand sources requires consideration of source and congruence effects., Author(s): Ali Tezer [sup.1] , H. Onur Bodur [sup.2] , Bianca Grohmann [sup.3] Author Affiliations: (1) grid.256696.8, 0000 0001 0555 9354, Department of Marketing, HEC Montréal, , 3000 chemin de [...]

The authors examine the upstream impact of a firm's customer-centric organizational structure on its supplier, including both positive effects of greater revenue and negative effects of demanding services that raise the supplier's costs. These countervailing effects on supplier profit are moderated by characteristics of the firm's buying center and the firm-supplier relationship, in accordance with the value capture literature. Study 1 examines the proposed firm-level financial effects of the dual processes, using surveys of industrial firms matched with secondary data from their supplier. Study 2 assesses the supplier-level net impact of the dual processes, using publicly available data to shed light on the upstream financial impact of firms' customer-centric structures across a broad sample of Fortune 500 suppliers. Findings highlight the need for a supplier to proactively assess the structure of each buyer-firm, as a supplier can take steps to mitigate cost effects and enhance revenue effects., Author(s): Andrew T. Crecelius [sup.1] , Justin M. Lawrence [sup.2] , Ju-Yeon Lee [sup.3] , Son K. Lam [sup.4] , Lisa K. Scheer [sup.5] Author Affiliations: (Aff1) 0000000106344187, grid.265892.2, Collat [...]

In this paper, we extend the understanding of versioning strategy of an information goods monopolist and provide new insights on when versioning is optimal. To do so, we derive the optimal product line or versions of an information good and the corresponding prices. By relaxing common assumptions on consumers' usage costs, versioning costs and capital research and development costs, we provide new insights as well as reconcile extant findings on versioning. For a good with no-free-disposal (NFD), i.e., one where consumers have usage costs, our results show that a monopolist's marginal cost and consumers' usage costs have the same impact on its versioning strategy, and that these factors are the sole reason for optimality of versioning of information goods. By endogenizing the production of the highest-quality, we show that capital costs create a downward distortion of quality even for the highest types in the market even under full information. Presence of separate versioning costs also lowers the qualities served to the high types and reduces the segment of consumers who are served with product versions. However, versioning costs do not affect market coverage or the price-quality menu itself. Further, when some of the consumer usage costs are absorbed by the firm (as in case of cloud-based provisioning), it does not necessarily lead to market expansion. History: Accepted by Chris Forman, information systems. Keywords: versioning * information goods * mechanism design * pricing * free disposal * product line * second-degree price discrimination * NFD, 1. Introduction Early research in economics has studied feature-differentiated product line and pricing decisions of physical or industrial goods vendors, often called vertical differentiation or quality segmentation models (Mussa and [...]

When companies plan to build multi-category brands by adding new products to their product lines, two questions loom large: (1) whether and (2) when brand extensions perceived as distant (comparatively dissimilar) from the company's existing core line of products should be introduced. Since many real-world firms have introduced distant brand extensions, this paper focuses on the second question: when the company should introduce a distant extension within a series of other closer extensions-a decision for which there is little research-based guidance for managers. Building on theories of mental categorization, the authors argue that early (vs. late) introductions of distant brand extensions can be more beneficial for the brand. Three studies support this conclusion, demonstrating that early (vs. late) introductions of distant extensions can result in more positive final brand attitudes; that is, attitudes held after all the extensions have been introduced. This effect is driven by how easily the distant extension is integrated into consumers' brand concepts and is moderated by overall brand positioning. Importantly, this effect on final brand attitudes is shown to influence behavioral measures of product preference and brand engagement., Author(s): Jeffrey R. Parker [sup.1] , Donald R. Lehmann [sup.2] , Kevin Lane Keller [sup.3] , Martin G. Schleicher [sup.4] Author Affiliations: (1) Department of Marketing, Georgia State University, 0000 [...]

Oftentimes, close competitors carry partially overlapping assortments in seeming contradiction to the principle of maximum differentiation. One of the justifications of such practice is that an overlapping assortment with competitive prices on the common products may prevent further consumer search and therefore could be useful even when profits from the overlapping products do not justify the costs of carrying them. In this paper, we examine the validity of this intuition and show that such strategy may indeed be optimal when consumers are uncertain about prices they might find elsewhere and face shopping costs for discovery of all prices. Specifically, we show that the (larger) assortment with product overlap may signal a 'competitive' price of the relatively unique product and prevent further consumer search for a lower price on it. An implication of this finding is that a consumer may rationally behave as if she likes a larger assortment even if the assortment is enlarged by adding products the consumer has no interest in. Furthermore, we show that the optimal pricing strategy may include pricing of common products or products with known costs at a loss, which provides a novel explanation of loss-leader pricing. Keywords: game theory * retail assortment * consumer uncertainty * signaling * competitive strategy * shopping costs, 1. Introduction Once, some years ago, one of the authors was attracted by a window display of short-wave portable radio receivers in a small shop of San Francisco's Chinatown. He [...]

As social media gains more importance, managers are challenged to quantify its return on sales. The academic understanding in the effectiveness of social media is limited, and in fact the synergistic effects between social media and traditional marketing efforts have rarely been investigated. Despite the dynamics in marketing effectiveness on sales, the time-varying effectiveness of social media has never been studied either. In this study, we capture the time-varying effects of social media and the time-varying synergistic effects of social media and traditional marketing with a time-varying effect model (TVEM) approach. The empirical analyses of a large U.S. ice-cream brand sales reveal that a) the effectiveness of social media and traditional marketing vary over time, b) the synergistic effects vary over time for social media with product sampling and with in-store promotions, c) the proposed TVEM approach has a higher predictive accuracy than the benchmark models, and d) the proposed TVEM approach saves marketing costs by $0.4 million per year, compared to the time-invariant benchmark model. Overall, this study enables managers to not only better understand the synergistic effects of social media marketing and traditional marketing, but also the time-varying effectiveness of their marketing efforts with TVEM approach for better resource allocation., Author(s): V. Kumar [sup.1] , JeeWon Brianna Choi [sup.1] , Mallik Greene [sup.2] Author Affiliations: (1) 0000 0004 1936 7400grid.256304.6Georgia State University, 3348 Peachtree Rd, NE, Suite 204, 30326, Atlanta, [...]

Within many of the multioutlet branded chains that dominate the retail and services landscape, the organizational form (e.g., company management, franchising) used to manage an outlet varies from site to site, as do the prices charged at those sites. I propose that organizational form and prices may be systematically related as a result of brand externalities. In particular, I develop logic that the relevant form of externality should differ for upper quality tier brands and lower tier brands. Using panel data on price and organizational form from more than 6,700 branded U.S. hotels affiliated with 40 'dual-distribution' brands--those brands that simultaneously company manage and franchise individual outlets--I find that, consistent with the brand externality arguments, company-managed locations have higher prices within high-quality chains, whereas franchisees price higher in the lower tiers. History: Accepted by Bruno Cassiman, business strategy. Keywords: organizational studies * strategy * hotel * motel * pricing * brand externality * signaling, 1. Introduction The institution of 'dual distribution'--that is, a firm's simultaneous use of a vertically integrated channel and a contractually based channel to distribute and sell its goods or services--continues [...]

While the examination of brand extensions in sport has started to garner more attention, research on the use of professional sport teams as brand extensions of non-sport related corporate parent brands is limited. In particular, what has yet to be examined is the perceived impact ownership of these teams has on the parent brand. The authors sought to examine this effect by interviewing team executives of professional baseball teams in South Korea that are owned by corporate parent brands (e.g., the Samsung Lions, Kia Tigers). The results suggest that the teams are generally given power by the parent brand to operate autonomously, and there was some consensus that team performance does have an effect on parent brand image and sales of the parent brand's products and/or services. These findings shed light on the nature of using teams as brand extensions and provide a number of theoretical and practical implications., Introduction Baseball, while appreciated around the globe, has a long and rich heritage in South Korea. This is especially true at the professional level. The Korea Baseball Organization (KBO) consists [...]

Introducing a case study on product management, this paper applies the Life Cycle Cost (LCC) method to solve a particular problem of design selection in the area of mechanical engineering. It is clearly explained and illustrated that various cost types need to be taken into account, ranging over the whole life of the product from concept to end-of-life, and related to an appropriate unit of utility. In order to achieve maximum effect, such a comprehensive economic analysis should ideally be undertaken at a very early stage of the product's life cycle, such as its design or even conception. Advanced techniques, including sensitivity analyses and simulations, will typically be required to gain an adequate insight into various processes and uncertainties contained in any realistic life cycle model. Koristeci studiju slucaja u upravljanju proizvodom, u ovom se radu primjenjuje metoda izracuna troskova tijekom cjelokupnog zivotnog ciklusa proizvoda, kako bi se rijesio specifican problem izbora dizajna proizvoda u podrucju strojarstva. Pritom se objasnjava i predocava da u obzir treba uzeti razlicite vrste troskova, koji se pojavljuju tijekom cijelog zivota proizvoda (tj. od njegove konceptualizacije, pa do kraja zivotnog ciklusa), a treba ih usporediti s odgovarajucom razinom korisnosti. Da bi se postigao najveci ucinak, ovako bi slozenu ekonomsku analizu trebalo obaviti u vrlo ranoj fazi zivotnog ciklusa, kao sto je faza dizajna ili, cak, inicijalnog osmisljavanja proizvoda. Pritom ce biti potrebno koristiti napredne tehnike, kao sto se analiza osjetljivosti i simulacija, s ciljem odgovarajuceg razumijevanja procesa i neizvjesnosti, koji se pojavljuju u svim realisticnim modelima zivotnog ciklusa proizvoda., 1. INTRODUCTION As most users of durable goods ultimately find out, a product developed or purchased at the lowest initial cost need not necessarily be the one which also provides [...]

Not all treatment centers are created equal, but getting the community to understand what differentiates your services remains an ongoing challenge. Behavioral healthcare facilities are often positioned with similar missions, [...]

Product take-back and reuse is sometimes at odds with the rapidly evolving desires of some customers. For other customers, the environmental benefits of reuse more than compensate for minor drawbacks. 'Selling a service' (rather than a product) through leasing enables the manufacturer to control the timing and quality of product take-back but current methods assume a fixed leasing period. What is needed is a method for fine tuning the time span of customers' life cycles in order to provide each market segment the combination of features it most desires. This paper presents a new method for performing long range product planning so that the manufacturer can determine optimal take-back times, end-of-life design decisions, and number of lifecycles. The method first determines a Pareto optimal frontier over price, environmental impact and reliability using a genetic algorithm. Then, a multiattribute utility function is employed to maximize utility across different segments of the market and also across different lifecycles within each segment. Post-optimal studies help determine feasibility of component redesign in addition to parts consolidation. The proposed method is illustrated through an example involving personal computers. [DOI: 10.1115/1.4002142]

This paper presents a method for assessing the quality of a progressive design process by measuring the profitability of the product that the process generates. The proposed approach uses separations, a type of problem decomposition, to model progressive design processes. The subproblems in the separations correspond roughly to phases in the progressive design processes. The proposed method simulates the choices of a bounded rational designer for each subproblem using different search algorithms. This paper presents a simple two-variable problem to help describe the approach and then applies the approach to assess motor design processes. Different types and versions of these search processes are considered to determine if the results are robust to the decision-making model. The results indicate that well-designed progressive design processes are the best way to generate profitable product designs. Methods for assessing the quality of engineering design processes can be used to guide improvements to engineering design processes and generate more valuable products. [DOI: 10.1115/1.4001902]

Product recovery has become a field of rapidly growing interest for product manufacturers as a promising solution for product stewardship as well as for economic viability. Because product recovery is highly dependent on the way a product is designed, it should be considered in the design stage so that the product is designed to have high recovery. potential. To make a product easy to recover, manufacturers first need to understand the links between product design and recovery profit and be able to evaluate which design is better than others and why. This study proposes a framework for analyzing how design differences affect product recovery and what architectural characteristics are desirable from the end-of-life perspective. For better design evaluation, an optimization-based model is developed, which considers product design and recovery, network design simultaneously. For illustration, a comparative study with cell phone examples is presented. Three cell phone handset designs that share the same design concept but have different architectural characteristics are created, and the recovery potential of each design variant is evaluated under three different recovery scenarios. The results show that the framework can highlight preferred design alternatives and their design implications for the economic viability of end-of-life recovery. [DOI: 10.1115/1.4001411]

We consider a firm that invests in capacity under demand uncertainty and thus faces two related but distinct types of risk: mismatch between capacity and demand and profit variability. Whereas mismatch risk can be mitigated with greater operational flexibility, profit variability can be reduced through financial hedging. We show that the relationship between these two risk mitigating strategies depends on the type of flexibility: Product flexibility and financial hedging tend to be complements (substitutes)--i.e., product flexibility tends to increase (decrease) the value of financial hedging, and, vice versa, financial hedging tends to increase (decrease) the value of product flexibility--when product demands are positively (negatively) correlated. In contrast to product flexibility, postponement flexibility is a substitute to financial hedging as intuitively expected. Although our analytical results assume perfect flexibility and perfect hedging and rely on a linear approximation of the value of hedging, we validate their robustness in an extensive numerical study. Key words: financial hedging; postponement; flexibility; risk management History: Received September 25, 2006; accepted November 4, 2009, by Aleda Roth, operations and supply chain management. Published online in Articles in Advance March 31, 2010., 1. Introduction This paper studies the relationship between financial hedging and operational flexibility when both are used to mitigate a firm's exposure to demand uncertainty. Most operations are exposed to [...]

A study on how managers can ensure that their products and services stay relevant to customers is presented. Managers have to make sure everyone on the organization really understands and supports the brand's promise. Insights on five questions that managers must pose to diagnose and determine where the weaknesses lie are also given.

We develop a branch-and-price algorithm for constructing an optimal product line using partworth estimates from choice-based conjoint analysis. The algorithm determines the specific attribute levels for each multiattribute product in a set of products to maximize the resulting product line's share of choice, i.e., the number of respondents for whom at least one new product's utility exceeds the respondent's reservation utility. Computational results using large commercial and simulated data sets demonstrate that the algorithm can identify provably optimal, robust solutions to realistically sized problems. Key words: branch and price; column generation; combinatorial optimization; conjoint analysis; integer programming, marketing; optimization; product line design; share of choice History: Received November 3, 2008; accepted May 24, 2009, by Jagmohan S. Raju, marketing. Published online in Articles in Advance July 20, 2009., 1. Introduction Offering a product line enables a firm to satisfy the heterogeneous preferences of its current customers and to attract new customers. The product line design problem has drawn [...]

The interconnected histories of quality control, authenticity, and ownership that constitutes the modern brand is discussed. The focus is on the material and cognitive properties of sealing practices in Mesopotamia's Urban Revolution during the 4th century B.C. and the transition of seals from personal amulets to a means of labeling mass-produced goods.