Consumer-Driven Demand and Operations Management Models

Consumer-Driven Demand and Operations Management Models

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To compete in todaya€™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 (companya€™s own web site, dealersa€™ web sites, or companya€™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.Therefore, some customer may have been forced to choose their a#39;second-besta#39; alternative due to capacity constraints. ... When hybrid cars were introduced, first by Honda (Insight) and then by Toyota (Prius), they were very novel products significantly different in ... In contrast, Honda Insight had really poor sales selling less than 500 cars (edmunds 2006) so much so that plans are currently afoot to shutanbsp;...

Title:Consumer-Driven Demand and Operations Management Models
Author: Serguei Netessine, Christopher S. Tang
Publisher:Springer Science & Business Media - 2009-06-02

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