Consumer-driven Demand and Operations Management Models: A Systematic Study of Information-technology-enabled Sales Mechanisms

To compete in today's volatile market with rapidly changing consumer tastes and erce competition, companies in the manufacturing and service industries are - ploying new mechanisms to increase sales, market shares, and pro ts. As an - fective mechanism to segment a market comprising of consumers with different needs, preferences, and willingness-to-pay, many rms have used product (or s- vice) variety with different price points to serve different segments of the market, see Ho (1998). Ideally, the price of each of these products (or services) targets a particular segment of customers. For example, airlines often use different terms of sales (refundable/non-refundable, upgradable/non-upgradable, direct/connecting ight, etc. ) to sell economy class tickets at different prices. Likewise, retailers - ten sell the same product at different prices in different channels (company's own web site, dealers' web sites, or company's physical stores) or at different times (- fore, during, and after the selling season), see Talluri and van Ryzin (2005). Ample academic literature in Operations Management and other areas considered these strategies. However, as consumers become more knowledgeable about the product, pricing, organizational and operational policies that the companies deploy for pr- ucts and services, their purchasing begins to change dramatically. In the academic Operations Management literature, consumer demand is often assumedtobe exogenous so that demand functions are usually modeled as well de- ned and exogenously speci ed functions of price and/or other product attributes such as quality.

The consumer demand functions that drive traditional retail sales are the well-defined functions of price and product attributes (e.g., quality, style trends, etc.). However, these new sophisticated selling techniques―examples are mixed sales channels, portals, group buying, and auctions, each of which is enabled by information technologies, the Internet, or both―are changing and expanding consumer-driven demand in many ways. The underlying pattern of demand created by these evolving mechanisms will be a marked departure from traditional factors driving consumer demand.  To analyze and understand rational and strategic consumer demand, the editors have divided the book into five discrete sections that first consider rational consumer behavior and the endogenous decision making mechanisms behind it.  They then present sections on organizational strategies, product strategies, operational strategies, and, finally, pricing strategies for managing rational/strategic consumer behavior.  Together, this handbook provides the state-of-the-art OM models that will help the reader to understand and effectively respond to increasingly rational purchasing behavior.

 

CONSUMER-DRIVEN DEMAND AND OPERATIONS MANAGEMENT MODELS has been developed by two of the leading researchers in the POM/Marketing interface. It is comprised of commissioned chapters by top research scholars in supply chain management, revenue management, and e-commerce among others, all of which are grounded in information technologies and consumer demand research.