Academic Publications: Marketing
Supply Chain Management: Technology, Globalization, and Policy at a Crossroads
M. Eric Johnson
Interfaces, Volume 36, 2006
The forces of globalization and technology are changing supply chains. In many cases, the supply chains are literally disintegrating. Product designers, marketers, and manufacturers that were previously housed in a single facility are now spread over several continents in organizations with different cultures, languages, and business objectives. For example, not long ago, apparel firms, such as Levi Strauss and Company, did it all—operating their own US production plants along with their core design and marketing activities. In the past few years, that has changed.
Paper in PDF Format (46K)
Topics: Manufacturing, Marketing, Product Development, Risk, Supply Chain
Static and Dynamic Pricing of Excess Capacity in a Make-to-Order Environment
David Pyke, Praveen K. Kopalle, Joseph M. Hall
CDS Working Paper Series 2003-2
The interactions between pricing and production/supply chain performance are not well understood. Can a firm benefit from knowing the status of the supply chain or production facility when making pricing decisions? How much can be gained if pricing decisions explicitly and optimally account for this status? This paper addresses these questions by examining a make-to-order manufacturer that serves two customer classes – core customers who pay a fixed negotiated price and are guaranteed job acceptance, and “fill-in” customers who make job submittal decisions based on the instantaneous price set by the firm for such orders. We examine four pricing policies that span a range of complexity and required knowledge about the status of the production system at the manufacturer, including the optimal policy of setting a different price for each possible state of the queue. We demonstrate properties of the optimal policy, and we illustrate numerically the financial gains a firm can achieve by following this policy vs. simpler pricing policies. The four policies we consider are (1) state-independent (static) pricing, (2) allowing fill-in orders only when the system is idle, (3) setting a uniform price up to a cut-off state, and (4) general state-dependent pricing. Although general state dependent pricing is optimal in this setting, we find that charging a uniform price up to a cut-off state performs quite well in many settings and presents an attractive trade-off between ease of implementation and profitability. Thus, a fairly simple heuristic policy may actually out-perform the optimal policy when costs of design and implementation are taken into account.
Paper in PDF Format (190K)
Topics: Knowledge Management, Manufacturing, Marketing, Process, Supply Chain
Dynamic Pricing on the Internet
P. K. Kannan, Praveen K. Kopalle
International Journal of Electronic Commerce, 5 (3) , 2001
The pricing of products and services sold over the Internet channel is becoming more dynamic. In part this is due to the increasing use of auction models in business and consumer markets to sell commodities, excess inventories, used merchandise, rare items collectibles, and other items. Marketers are resorting to dynamic prices even for goods and services sold at posted prices, spurred partly by the lower menu cost of changing prices on the Internet and partly as a response to consumer use of price-comparison bots. This paper explains the relevance of dynamic pricing in the digital economy by comparing the physical value chain with the virtual-information-based value chain. It explores the implications of certain aspects of dynamic pricing in consumer markets (e.g., dynamic pricing of posted prices, reverse auction pricing of goods and services as used by Priceline) from the perspective of consumer price expectations, the role of information and consumer learning, and their impact on consumer responses to prices across different product categories. Several propositions are developed, and issues for research are identified. More ›
Topics: Customer, Internet / Connectivity, Marketing, Strategy
Product Sequencing, Knowledge, and e-Commerce
Ruth S. Raubitschek, Constance E. Helfat
The Strategic Management of Intellectual Capital and Organizational Knowledge, 2001
The digital economy spans a wide range of businesses and services. This paper focuses on electronic commerce on the Internet, defined as purchases and sales of goods and services transacted over the Internet. Two primary forms of electronic commerce involve business-to-consumer and business-to-business transactions. In what follows, we use the product sequencing model to analyze well publicized examples of each of these forms of business. The Internet businesses on which we focus—retail sales and mass customization (business-to-consumer) and electronic buyer-supplier online marketplaces (business-to-business)—are still in the early stages of their development. Like all other aspects of electronic commerce and the digital economy more generally, it is difficult to predict the ultimate form that these businesses will take. We can, however, use the product sequencing model to track the evolution of these businesses, to understand the nature of the knowledge required for the current visions of these businesses, and to analyze how firms may be able to use this knowledge to create new products and services over time.
Paper in PDF Format (20K)