High-end Customers Research Articles

A Column-Generation Based Approach for Integrating Surgeon and Surgery Scheduling

This paper addresses the operating room management problem for private hospitals aimed at the high-end customer market. A patient preference-driven policy that incorporates surgeon scheduling into the surgery scheduling process is proposed to satisfy patients’ personalised preferences for surgeons and surgery dates. A stochastic programming model is formulated with the objective of minimizing operating rooms’ staffing costs. A column generation-based heuristic algorithm is developed to solve the integrated surgeon and surgery scheduling issue. The performance of the algorithm is tested on different scale instances. Numerical results indicate that the patient-preference driven approach can identify an effective solution to operating room scheduling that satisfies patients’ preferences with only slightly increased staffing costs. Additionally, the column generation-based heuristic algorithm can obtain solutions within a 1.6% gap of the lower bound obtained by the linear relaxed problem.

Analysis of characteristics and problems of international trade of Poria cocos in China

Poria cocos is one of medical materials frequently used in China and well marketed at home and abroad. Based on the analysis of exports and imports data of P. cocos, we found that large proportions of P. cocos were exported, while only a small proportions of those were imported in China between 2011 and 2016. During periods of these six years, the annual exporting trade of P. cocos in quantity significantly decreased, but that in dollars tend to increase slightly and the unit-prices of P. cocos significantly increased. Statistically, the average annual export trade of P. cocos from 2011 to 2016 in quantity and dollars were 9 279.73 tons and 35.454 million dollars, respectively. And the average annual export in unit-price was 4.14 dollars per kilogram. In total, P. cocos came from 29 provinces and exported to 44 countries through 21 ports. More than 98% of total exports of P. cocos were flew to the markets of countries in Asia, of which Hong Kong was the major partner in import trade of P. cocos. Large amount of P. cocos came from Guangdong province and exported mainly through Shenzhen port. Except the exports, China also imports P. cocos from other countries, among which Korea was the major country exports largest amount of P. cocos to China. And most of P. cocos were imported by Jilin province and mainly through Changchun port. To improve the export kinetic, quality and profits of P. cocos, and thus enhance the international competitiveness of the industry of P. cocos, Chinese governments should emphasize the researches on the products of P. cocos, broaden the demand space of the high-end customers, stimulate the high-end market grow in high speed and accelerate the process of standardization in future.

THE ROLE OF BRICK AND MORTAR RETAIL DESIGN IN THE LUXURY INDUSTRY

With consumption increasingly shifting to online and mobile, the physical retail environment has been called into question. However, not all facets of a physical experience can be substituted virtually (Anderson & Eckstein, 2013; Johnson, Kim, Mun & Lee, 2014, Piotrowicz & Cuthbertson 2014, Verhoef, Kannan, & Inman, 2015). The enduring quest for real, tangible experiences with real people and in real environments is one reason for the acknowledgement of the importance of architectural branding 1 , enabling memorable experiences (Raffelt, 2012). Here, architectural branding plays a key role at the intersection of consumer behavior, marketing management, and design. Furthermore, one can also observe the trend of forward brand verticalization in retail: with brands increasingly strive towards direct distribution, they open and manage more retail stores themselves (Kahn, Inman & Verhoef, 2016, Nierobisch et al. 2017, Teufel & Zimmermann, 2015, Tischer, 2014). This is especially true for the luxury industry, where brands are looking for ways to attain more control over the brand in order to steer highend customer experiences (Wiedmann & Hennings, 2013, Deloitte Touche Tohmatsu, 2015). Therefore, demand to develop good architectural branding in retail and to improve retail design strategies for current and future challenges is crucial. During the last five years, marketing scholars, renowned management consulting firms, and the popular press have examined the role of brick and mortar as one aspect of an omnichannel strategy in a world of increasing digitalization (Anderson & Eckstein, 2013; Bauer, Beil, & Wege, 2014; Piotrowicz & Cuthbertson 2014; Worden, 2013; Verhoef, Kannan, & Inman, 2015). The importance of architecture in general and retail design as a specialization thereof in marketing strategy has been broadly acknowledged (e.g. Kotler, 1973; Kotler & Rath, 1984; Martineau, 1958; Munster & Haug, 2017). Although, there is only little research focused on architectural branding (Raffelt, Littich & Meyer, 2011; Raffelt, Schmitt & Meyer, 2013). This is likely caused by its position at the intersection of the research fields on retail stores (e.g Kent & Stone, 2007; Kirby & Kent, 2010; Borghini, Diamand, Kazinets, Mccrath, Muiz, JR., & Sherry, JR., 2009; Hiss; 1987; Kozinets, Sherry, DeBerry-Spence, Duhachek, Nuttavuthisit, & Storm, 2002), brand experience (e.g. Brakus, Schmitt & Zarantonello, 2009; Pine & Gilmore, 1998; Schmitt 1999), and atmospherics (e.g. Kotler, 1973; Donovan & Rossiter, 1982; Rayburn & Voss, 2013; Spence, Puccinelli, Grewal, & Roggeveen, 2014). Here, articles primarily focused on store design in general (e.g; Kent & Sone, 2007; Kirby & Kent, 2010; Meyers-Levy & Zhu, 2008),flagship store design (e.g. Borghini et al., 2009; Hiss; 1987; Kozinets et al., 2002), or were primarily published in retail management journals. However, in marketing and management research, there are limited journal publications about the role of physical stores in the luxury industry in times of digitalization. Dion & Borraz (2015) stated that luxury brands recently followed the strategy to build very costly and unique boutiques with star architects, which have become sacred places. The role of store design in the luxury industry is even scarcer. In two case studies, Jiang, Nagasawa, & Watada (2014) investigated the role of store design for the brands Bally and Tod's in Japan. Thus, this research project aims to fill this research gap and extend the research in the field of architectural branding in the luxury industry, investigating role of physical stores in an omnichannel construct and to gain a deeper knowledge on how to sustainably tangibilize brands in modern and future luxury retail environments, answering the following question: What is the role of store design for luxury monobrand stores in a digital economy? This research project will apply an inductive and exploratory research method, implying a qualitative research design. It will build upon existing literature in the mass market and draw from two studies using in-depth interviews with academics and practitioners from the field of marketing and retail primarily working in the luxury industry to gain more insights about the role of physical stores in this specific industry. One study will focus on ways to make brands tangible in store. The other study will lay its focus on how a omnichannel strategy supports luxury brands in offering a superior in-store experience. Furthermore, results from a workshop with executives from brands with high-end positioning will be taken into account as well as expert interviews about the role of store design in general. These four studies will be presented in an aggregated manner during the conference. The overall contribution of this project is to provide insights about the role of brick and mortar retail design in the luxury industry and thereby extend research in the field or architectural branding in retail.

Measure and Express the CRP of High-End Customers Retail Banking

It mainly discusses the high-end customer relationship profitability in the Retail Banking, the Pareto/NBO model was applied to measure the potential of customer relationship profitability, then propose the method of CRP measurement based on Pareto/NBO model, and verified the feasibility and effectiveness of the method of CRP measurement. The result is used for subdividing the high-end customer relationships in the Retail Banking.

Are Mobile Networks Always a Substitute for Fixed Networks?

Fixed to mobile substitution is a trend that is reshaping the telecommunications industry. Telkom's response to this trend, for example, has been to build a mobile network to recapture revenues lost to mobile operators. The question is, to what extent are fixed and mobile networks substitutes, and are there groups of customers for whom fixed and mobile are not substitutes? There is evidence that suggests that, for many customers using voice services, fixed and mobile services are to some degree substitutes. However, for small, medium and large enterprise customers, and for high-usage residential customers, there is evidence that mobile broadband networks are not a substitute for fixed broadband networks. There is a trade-off between speed and throughput in mobile networks that does not exist to the same degree in fixed networks. This is due to the limited capacity and shared nature of the use of radio frequency spectrum for broadband. Fixed incumbent operators worldwide are able to distinguish between business and residential customers, and very often charge significantly higher prices to business and high-end residential customers. They are able to do this because the telecommunications operators are able to identify business customers separately from consumers, and are able to prevent arbitrage: a copper line running to a business premises cannot be substituted for a copper line running to a house nearby. Operators are also able to identify high end consumers through self-selection by bundling, for example, video content with a DSL subscription. The implications of this are that, rather than adopting a more relaxed approach to the regulation of fixed operators in the face of competition from mobile operators, fixed operators should be closely regulated in order to protect significant groups of customers.

Mark-Down Pricing

Discount sales have been increasing in Indian retailing due to the growing competition in the sector. In this research the authors analyze the data of a fashion retail store to study the effect of mark-down pricing on the sales. Their store level analysis shows that mark-downs have a positive impact on sales in an aggregate level. At a style level, however, some items showed a negative and significant effect on sales. This negative influence is explained by the predominant focus of the Store to attract high end customers characterized by conspicuous consumption.

The Importance of Institutional Design: Evidence from the New York Stock Exchange IPO and Reg. NMS

For more than two hundred years, the New York Stock Exchange (NYSE) provided the dominant national platform upon which firms could list, and investors could trade, securities. Until 2006, the NYSE was organized as a private mutual non-profit firm whose membership, dominated by investment banks, maintained tight control over floor brokers, specialists and issuing firms. Even when over-the-counter markets such as the NASDAQ and alternative platforms such as “electronic communications networks” (ECN’s) offered faster execution of trades, NYSE floor quotes were protected against “trading through” to such competing venues (the so-called “trade-through” rule). The NYSE long argued that this framework provided highly liquid and continuous markets that lowered the cost of capital for, and incentivized good quality governance of, issuing firms. As a private monopoly the NYSE’s self-regulation periodically generated controversy, and the NYSE was finally subjected to serious government oversight in the 1930’s. In part based on that original Congressional mandate, in 2005, the Securities and Exchange Commission (SEC) began a two-year process of implementing Regulation NMS (for “national market system”). Most significantly, Reg. NMS, among other features, eliminated the protective “trade-through” rule thus enabling customers to trade off price quality for faster trade execution of trades on ECN’s. In 2006, in order to defend its place in the new post-“trade-through” world enabled by Reg. NMS, the NYSE demutualized and went public via a merger with Archipelago Holdings Inc., a large publicly listed ECN. We examine stock market data around the implementation of Reg. NMS and the NYSE IPO to show that eviscerating the “trade-through” rule triggered an explosion of new trading on alternative venues but also increased volatility in the pricing for formerly staid NYSE-listed shares. The end of the NYSE’s monopoly reduces choices for issuing firms as the NYSE no longer offers an “orderly market” for their listed shares. This increases the cost of capital for stable, well-managed firms and contributes to the reluctance of promising firms to go public thus eliminating a source of high-end customers for underwriters and undermining liquidity for investors. Reg. NMS and the NYSE IPO also likely encourage the formation of “dark pools” (transactions that take place outside of the regulated markets) and the spread of risky “high frequency” trading.

Exogenous Learning, Seller-Induced Learning, and Marketing of Durable Goods

When learning of product characteristics takes some time, a firm introducing a new durable faces the trade-off between releasing early to an uninformed market and deferring release to a better-informed market. In a two-period monopoly, we examine the strategic interaction between exogenous learning (EL) and seller-induced learning (SIL) and the firm's product release and pricing strategies. The familiar, direct effect of strong learning is to facilitate a higher price for informed customers. We point out its indirect effect of inducing a higher period 1 price for uninformed customers (by lowering their expected utility from learning). These two effects underlie three major results. First, a strong learning intensity does not always imply deferred release. Surprisingly, for medium unit costs, the firm releases late (early) when learning intensity is weak (strong). Second, SIL facilitates different product release strategies, depending on the unit cost level. Potential SIL investment facilitates early release for low or medium unit costs, but may facilitate deferred release for high unit costs. Lastly, when customers have heterogeneous prior valuation, the high-end customers may buy early at a lower price and the low-end customers may buy later at a higher price, contrary to the usual skim pricing with informed customers. This paper was accepted by Preyas Desai, marketing.

Management Insights

Management Insights

What factors influence buying center brand sensitivity?

Building on information processing theory (IPT), this empirical study investigates the factors that drive a buying center's level of sensitivity to brand information. The authors propose that buying center brand sensitivity is related in a curvilinear fashion with purchase importance and purchase complexity, and that these relationships are moderated by several environmental, firm, and product factors. Data provided by 273 organizational buying center members confirm the presence of an inverse U-shaped relationship between purchase importance and brand sensitivity, strengthened in conditions of high brand presence and high end-customer demand. Purchase complexity and brand sensitivity appear to relate in a U-shaped fashion but only in light of the moderating effects of product tangibility. The relationship between purchase complexity and brand sensitivity appears stronger when buying firms are small and have prior contractual ties with their selling partners. These results offer guidance to managers concerning when business-to-business (B2B) brand investments are likely to offer their greatest return.

Spotlight on dry aging beef: effects of loin type, aging methods, and aging time (2009)

Dry aging is an old-time process used to produce a high quality beef product marketed to high-end customers. Its most unique quality is the distinctive dry-aged flavor. Dry aging has been accomplished through many protocols over the years, but an optimum protocol has not been adopted. Practitioners of this art are very interested in providing a consistent, quality, safe product. Traditionally, dry aging is done without packaging, which places more emphasis on plant quality control practices to achieve a consistent product. This limits the number of processors that have the ability to produce dry-aged product. Packaging bags with a very high water vapor transmission rate that may simulate traditional dry aging are now available. If the quality from dry aging in these bags is equal to that obtained with the traditional unpackaged method, other processors might consider dry aging because this bag allows for less stringent facility needs and potentially greater yields. Overall, an in-thebag dry-aging system would require fewer controls and still result in decreased weight losses, which would provide a significant yield advantage. Objectives of this research were to determine the combined effects of two different dryaging methods (unpackaged and in the bag), two loin-cut styles (bone-in shell loins and boneless strip loins), and two aging times (21 and 28 days) on flavor, juiciness, tenderness, palatability, development of the unique dry-aged flavor, moisture vapor loss, and microbial growth. An additional objective was to determine effects of vacuum packaging after dry aging on dry-aged flavor stability of steaks.

Product Development and Pricing Strategy for Information Goods Under Heterogeneous Outside Opportunities

This paper considers a two-stage development problem for information goods with costless quality degradation. In our model, a seller of information goods faces customers that are heterogeneous with regard to both the marginal willingness to pay for quality and the outside opportunity. In the development stage, the seller determines the quality limit of the product. In the second stage, the seller’s problem is to design the price schedule corresponding to different quality levels, taking into account production and distribution costs. We show that versioning is optimal for the seller when customers have multiple outside options or, more generally, convex reservation utilities. In addition, we show that in the optimal solution the seller discards both low-end and high-end customers. Among those that are served, the seller offers a continuum of (inferior) versions to customers with relatively low willingness to pay, and extracts full information rent from each of them. A common version with the quality limit is offered to the rest. We further prove that the seller should offer a single version when reservation utilities are either concave or linear. Through numerical experiments, we study the sensitivity of our results to changes in the cost structure and customer utilities.

Foreign Banks in Poor Countries: Theory and Evidence

We study how foreign bank penetration affects financial sector development in poor countries. A theoretical model shows that when foreign banks are better at monitoring high-end customers than domestic banks, their entry benefits those customers but may hurt other customers and worsen welfare. The model also predicts that credit to the private sector should be lower in countries with more foreign bank penetration. In the empirical section, we show that, in poor countries, a stronger foreign bank presence is robustly associated with less credit to the private sector both in cross-sectional and panel tests. In addition, in countries with more foreign bank penetration, credit growth is slower and there is less access to credit. We find no adverse effects of foreign bank presence in more advanced countries.

Foreign Banks in Poor Countries: Theory and Evidence

We study how foreign bank penetration affects financial sector development in poor countries. A theoretical model shows that when foreign banks are better at monitoring highend customers than domestic banks, their entry benefits those customers but may hurt other customers and worsen welfare. The model also predicts that credit to the private sector should be lower in countries with more foreign bank penetration. In the empirical section, we show that, in poor countries, a stronger foreign bank presence is robustly associated with less credit to the private sector both in cross-sectional and panel tests. In addition, in countries with more foreign bank penetration, credit growth is slower and there is less access to credit. We find no adverse effects of foreign bank presence in more advanced countries.

Foreign Banks in Poor Countries: Theory and Evidence

We study how foreign bank penetration affects financial sector development in poor countries. A theoretical model shows that when foreign banks are better at monitoring highend customers than domestic banks, their entry benefits those customers but may hurt other customers and worsen welfare. The model also predicts that credit to the private sector should be lower in countries with more foreign bank penetration. In the empirical section, we show that, in poor countries, a stronger foreign bank presence is robustly associated with less credit to the private sector both in cross-sectional and panel tests. In addition, in countries with more foreign bank penetration, credit growth is slower and there is less access to credit. We find no adverse effects of foreign bank presence in more advanced countries.

Case Article—Seagate–Quantum: Encroachment Strategies

Few terms in the recent literature on innovation management have been as widely used as the phrase disruptive technology. Yet this term is widely misunderstood. As Christensen and Raynor (2003, p. 143) note, “Many readers have equated in their minds the terms disruptive and breakthrough. It is extremely important, for purposes of prediction and understanding, not to confuse the terms.” This case shows how to recognize a potentially disruptive technology: it diffuses via a process of low-end encroachment. The new technology initially imposes little apparent threat because it sells to low-end or new customers, but it eventually encroaches on the current market from the low end upward. The case compares and contrasts low-end encroachment (using the example of a new, smaller disk drive involving the firms Seagate and Quantum) to the case of high-end encroachment, where a new product such as a Pentium IV initially sells to high-end customers. In an oversimplified but concrete way, the case shows how marketing concepts such as conjoint analysis and reservation price tie into the concept of a demand curve, and how operations improvements (via the learning curve, or via product and process design) can lead to market share changes and product diffusion. These all have implications on firm strategy. Thus the case integrates material from multiple disciplines and might be used in MBA, MS, executive, or undergraduate courses that cover topics such as technology management, operations strategy, new product development, marketing strategy, or competitive strategy.

LOW-END AND HIGH-END ENCROACHMENT STRATEGIES FOR NEW PRODUCTS

Successful new products typically encroach in some fashion on an existing market, impacting prices, sales, and profits for the old product(s). We present a framework in which encroachment takes one of two forms, either high-end or low-end. High-end encroachment is exemplified by Intel's Pentium III, which encroached on the Pentium II by first catering to high-end customers before diffusing to the low end to fully displace the Pentium II. Low-end encroachment is illustrated by disk drives with smaller form factors, which first catered to low-end customers desiring lower-cost, but eventually diffused upward to the high end. Our low-end encroachment framework may help clarify how a disruptive innovation impacts the market, in terms of sales prices, volumes, and profits. Similarly, our high-end encroachment results may lend insight into the market impact of a sustaining technology.