Initial Market Share Research Articles

The impact of online referral services on cooperation modes between brander and platform

<p style='text-indent:20px;'>The prevalent platform retailing has prompted branders to consider whether to expand their marketplace channel and adopt online referral services to improve performance. In this context, we develop a setting in which a brander sells a product directly by its official website, a manufacturer provides a substitutable product for a platform that additionally provides an online referral service. Then, a stylized model is established to investigate whether a brander should introduce a marketplace channel when a platform provides the online referral service. The results show that the brander always trends to join the platform if the price competition is intense, and the online referral service is an alternative option and improves a limited total demand for the brander. Moreover, the platform can take advantage of the online referral service as a tool to deal with the brander's marketplace channel intrusion. When the price competition is relatively weak and the platform's initial market share is moderate, both the brander and the platform choose <i>Brander-Marketplace-Reseller with Service Mode</i> to achieve a win-win situation; Otherwise, <i>Brander-Marketplace-Reseller without Service Mode</i> achieves a win-win situation. The platform should strategically choose to provide the online referral service for the brander as the platform fee increases.</p>

Interaction between innovation choice and market-entry timing in a competitive fashion supply chain

We consider a duopoly in which a premium firm (Firm 1) competes with a regular firm (Firm 2). They launch a new fashion product, adopting one of two types of innovation, qualitative or non-qualitative, which offer different levels of market acceptance and uncertainty. We consider two groups of fashion consumers, snobs and conformists (defined by preference for exclusivity or conformity). We first examine the case in which the premium firm commits to entering the market first and chooses its type of innovation, and then the regular firm decides on market-entry timing and innovation type. The price game and the strategy interaction between the two firms are examined. We show that consumers' exclusivity and conformity positively impact the optimal decisions of the two firms when the initial market share of snobs is large. When the market-share loss due to late entry is sufficiently high, Firm 1 may prefer a non-qualitative innovation under certain identified conditions; otherwise, it always prefers a qualitative innovation. Firm 2 always benefits from Firm 1's choice of qualitative rather than non-qualitative innovation. We further discuss the strategy interaction when the premium firm commits to entering the market late.

Optimal strategies of green product supply chains based on behaviour-based pricing

Behaviour-based pricing (BBP) fully considers the willingness to pay, behavioural characteristics and rational expectations of new and old customers and can dynamically adjust pricing strategies based on purchase histories. Therefore, compared with uniform pricing, BBP can promote the development of green products in the market. Additionally, BBP gradually influences the pricing decisions of the supply chain. Therefore, this paper explores for the first time the pricing decisions and coordination mechanisms of the green product supply chain (GPSC) under a behavioural pricing model. BBP is implemented under two scenarios, centralisation and decentralisation, and the optimal pricing and supply chain decision-making are compared. Under the centralised scenario, the profit, greenness, market share and environmental friendliness are all higher than those under the decentralised scenario, and in most cases, consumers can better afford green products. Therefore, a revenue-sharing model is designed to realise GPSC coordination under BBP. The numerical experiments show that the proportion of revenue shared by green product retailers is positively correlated with the initial market share of green products; the proposed coordination mechanism can improve the greenness and profits of enterprises in a GPSC, the consumer surplus of green products and the overall environment performance.

Should Your Brand Pick a Side? How Market Share Determines the Impact of Divisive Corporate Political Stances

Abstract When the public opinion on a social matter is divided, it is riskier for large brands to engage in activism than for small brands. As long as a brand’s initial market share is sufficiently small, engaging in activism can result in a net increase in customers even if the brand takes a stance that consumers overwhelmingly oppose. In contrast, large brands can lose more than they gain, even when opponents and supporters are in balance. Product quality or competitive prices are no insurance against taking the wrong stances. Consumers are willing to trade off price and quality for political values. Therefore, brands cannot dismiss the consequences of politics, even if they hold a traditional competitive advantage in price or quality.

A behaviour-based pricing model of the green product supply chain.

We study the pricing strategies of supply chains of green products under behaviour-based pricing. Considering consumer preferences for green product functional attributes and environmental attributes, we construct a two-stage supply chain. The optimal behaviour pricing of green products is solved, and the effects of green sensitivity and the cost coefficient on the optimal price are analysed. We find that when consumers are less sensitive to the greenness, with the increase in the market share of green products, green product retailers will increase the loyalty price. An increase in greenness sensitivity and a decrease in the greenness cost coefficient will increase the wholesale prices and retail prices of green products. Consumer attention to the greenness and a decrease in the initial market share of green products will be conducive to promoting the greenness and improving the environment. Consumers' emphasis on the greenness of their products will lead to higher profits for the manufacturers and retailers of green products.

Economics of Mobile Data Trading Market

To exploit users' heterogeneous data demands, several mobile network operators worldwide have launched the mobile data trading markets, where users can trade mobile data quota with each other. In this paper, we aim to understand the importance of data trading market (DTM) by studying the users' operator selection and trading decisions, and analyzing the operator's profit maximizing strategy. We model the interactions between the mobile operator and the users as a three-stage Stackelberg game. In Stage I, the operator chooses the operation fee imposed on sellers to maximize its profit. In Stage II, each user chooses his operator. In Stage III, each DTM user chooses his trading decisions. We derive the closed-form expression of the unique Nash equilibrium (NE) in Stages II and III, where every user proposes the same price such that the total demand matches with the total supply. We further show that the Stage I's problem is convex and compute the optimal operation fee. Our analysis and numerical results show that an operator with a small initial market share can increase its profit by proposing a DTM, which is in line with the real-world situation in Hong Kong.

Behavior-based pricing between organic and general food enterprises

PurposeThe pursuit of healthy and high-quality organic food has gradually become a trend. However, some researchers do not believe that the quality of organic food is higher than general food. Consumers’ changed preference for different quality food will also affect the sales strategy of food producer. The purpose of this paper is to consider behavior-based pricing (BBP) and decision-making problems between organic and general food enterprises, based on consumers’ heterogeneity.Design/methodology/approachIn this study, two different types of consumers are considered: consumers without preference difference and consumers with an organic food preference. This paper sets up two two-stage hoteling differential pricing models in the duopoly market, including organic and general food enterprises. Then, the optimal loyal price and poaching price of the two types of enterprises are solved, and the influence of each parameter on the pricing, market and profit of the two enterprises is analyzed.FindingsThis paper finds that, with the increase of the initial market share, the pricing strategies of organic food enterprises change from a loyal price lower than the poaching price to a loyal price higher than the poaching price, whereas the general food producer has the opposite pricing strategy. Furthermore, the difference in consumption utility between the two food types has a positive influence on the price of organic food, and a negative influence on the price of general food. In contrast, the consumer share without preference difference has a negative effect on organic food prices and a positive impact on the price of general food.Originality/valueThe contribution is constructive as no prior research has focused on the BBP and decision-making problems between organic and general food, and it considers the two types of consumers. Besides, the results also provide guidelines for choosing marketing strategies for organic and general food enterprises.

Evolution of Conformity Dynamics in Complex Social Networks

Conformity is a common phenomenon among people in social networks. In this paper, we focus on customers’ conformity behaviors in a symmetry market where customers are located in a social network. We establish a conformity model and analyze it in ring network, random network, small-world network, and scale-free network. Our simulations shown that topology structure, network size, and initial market share have significant effects on the evolution of customers’ conformity behaviors. The market will likely converge to a monopoly state in small-world networks but will form a duopoly market in scale networks. As the size of the network increases, there is a greater possibility of forming a dominant group of preferences in small-world network, and the market will converge to the monopoly of the product which has the initial selector in the market. Also, network density will become gradually significant in small-world networks.

The Budget Impact of Including Necitumumab on the Formulary for First-Line Treatment of Metastatic Squamous Non-Small Cell Lung Cancer: U.S. Commercial Payer and Medicare Perspectives.

Necitumumab (Neci) was the first biologic approved by the FDA for use in combination with gemcitabine and cisplatin (Neci + GCis) in first-line treatment of metastatic squamous non-small cell lung cancer (msqNSCLC). The potential financial impact on a health plan of adding Neci + GCis to drug formularies may be important to value-based decision makers in the United States, given ever-tightening budget constraints. To estimate the budget impact of introducing Neci + GCis for first-line treatment of msqNSCLC from U.S. commercial and Medicare payer perspectives. The budget impact model estimates the costs of msqNSCLC before and after adoption of Neci + GCis in hypothetical U.S. commercial and Medicare health plans over a 3-year time horizon. The eligible patient population was estimated from U.S. epidemiology statistics. Clinical data were obtained from randomized clinical trials, U.S. prescribing information, and clinical guidelines. Market share projections were based on market research data. Cost data were obtained from online sources and published literature. The incremental aggregate annual health plan, per-patient-per-year (PPPY), and per-member-per-month (PMPM) costs were estimated in 2015 U.S. dollars. One-way sensitivity analyses were conducted to assess the effect of model parameters on results. In a hypothetical 1,000,000-member commercial health plan with an estimated population of 30 msqNSCLC patients receiving first-line chemotherapy, the introduction of Neci + GCis at an initial market share of approximately 5% had an overall year 1 incremental budget impact of $88,394 ($3,177 PPPY, $0.007 PMPM), representing a 2.9% cost increase and reaching $304,079 ($10,397 PPPY, $0.025 PMPM) or a 7.4% cost increase at a market share of 14.7% in year 3. This increase in total costs was largely attributable to Neci drug costs and, in part, due to longer survival and treatment duration for patients treated with Neci+GCis. Overall, treatment costs increased by $81,812 (13.5%), and disease costs increased by $7,951 (0.4%), whereas adverse event costs decreased by $1,368 (0.5%) in year 1. From the Medicare perspective, the overall year 1 incremental budget impact was $438,056 ($0.037 PMPM, $3,112 PPPY), representing a 3.0% cost increase. The higher incremental budget in Medicare, compared with commercial plans, was due to higher msqNSCLC incidence in the older Medicare patients (154 vs. 30 patients, respectively). Results were most sensitive to Neci drug costs. Based on projected market shares, coverage for first-line therapy with Neci + GCis appeared to modestly affect overall U.S. health care budgets for msqNSCLC-related care. Given the small eligible patient population, the PMPM budgetary impact on a commercial health plan of reimbursing Neci + GCis in the first year was less than $0.01, rising with increased use of Neci + GCis to $0.025 in the third year. The real-world effect of Neci + GCis needs to be evaluated to validate this analysis; however, these findings may help policymakers in making coverage decisions for Neci + GCis. This study was funded by Eli Lilly and Company. Molife, Brown, Tawney, and Cuyun Carter are equity holders and employees of Eli Lilly and Company. Bly, Cinfio, and Klein are employees of Medical Decision Modeling, which received funding from Eli Lilly and Company to conduct this research and prepare this manuscript.

The dynamic investment strategy of online advertising based on spillover effect in duopoly competition market

Online advertising has become an important marketing instrument for many enterprises, and the impact of enterprises’ online advertising has been increasing rapidly. Significant long-term enterprise profits are dynamically determined by the continuous online advertisement investment strategies implemented. This paper formulates the investment cost function which reflects the characteristics and impacts of online advertising spillover effect to enterprises. Then the improved Lanchester model is used based on the investment cost function. According to the model, our research calculates the Nash equilibrium and does the numerical analysis under open-loop strategy and closed-loop strategy. (1) With the change of time and under the condition of open-loop and closed-loop, when the spillover effect level is higher, the investment amount on fixed-position online advertisement by the enterprises becomes opposite. (2) When the level of spillover effect is strong, the change in the market share of competitive enterprises is related to the initial market share under the condition of open-loop. Under the condition of closed-loop, the market share does not change in accordance with the level of spillover effect. (3) No matter under the open-loop strategy or the closed-loop strategy, the competitive enterprises with lower initial market share should increase the investment of the online advertising in order to attract new customers as early as possible.

Initial Identification of Mudharabah Savings Market Share Improvement Strategies in Indonesia

Sharia banking has been arising for 26 years in Indonesia. Its market share is still lower than 5%. Study about sharia banking’s market share is always an interesting observation. Mudharabah savings as one of the third party fund has a significant role to improve market share by low cost fund type. The objectives of this study are to analyze mudharabah savings elasticity, significant independent factor to it and initial market share improvement strategies. The methods used to combine vector error correction model (VECM) and business model canvas (BMC). This research concludes that conventional bank rates and sharia bank outlets have a relationship with mudharabah contract savings demand. Furthermore, mudharabah savings has a substitute relationship with conventional saving by negative cross elasticity. The results are combined with business model canvas (BMC) to describe mudharabah saving business model as a managerial action to explain initial strategies of mudharabah saving. BMC arranged by choosing conventional bank rates as value proposition focus and sharia bank outlets as key resources focus.Keywords: demand elasticity, mudharabah savings, business model canvas (BMC), sharia banking, initial strategies

PIH10 - Budget-Impact Analysis (Bia) Of The Introduction Of 52mg Levonorgestrel-Releasing Intrauterine System (Lng-Ius) As A Contraceptive Method Option In The Brazilian Public Healthcare System (Sus) To Avoid Unintended Pregnancy (Up) In 15 To 19 Year-Old Adolescents

Unintended pregnancy represents a significant economic burden to the health system with an estimated medical cost for SUS of BRL4.1 billion annually. Adolescent women have a high risk of UP, mainly due to the compliance required by most of the available contraceptive methods. Therefore, as LNG-IUS effectiveness doesn’t rely on user adherence, our objective is to evaluate the budget impact of the incorporation of LNG-IUS in SUS. BIA was developed with a 5-year time horizon. The number of 15 to 19-year old adolescents was obtained from the Brazilian Census data (IBGE), from which 67.2% would be sexually active according to the Ministry of Health and were considered as users of contraceptive methods. Initial market share of each method was estimated from UNESCO survey. It was assumed that LNG-IUS garnered 0.7% of the contraceptive market in the first year reaching 5% in the 5th year, taking most of its share from short-acting methods. The analysis considered the cost of each method, its medical resources and also the endpoint (UP cost). Prices of contraceptive methods were obtained from public sources: LNG-IUS 52mg (maximum government selling price) and current methods in SUS from public disclosures (Health Prices Database and the Official Gazette). Costs expressed in 2016 prices, exchange rate 1.00USD=3.70BRL. The expected number of women using LNG-IUS is 279.110 after 5 years. BIA showed overall savings of BRL12.7 million in 5 years, driven mainly by decreased UP-related expenditures and long-term savings in contraceptive costs. First-year acquisition cost of the device lead to increased costs in the first 2 years of incorporation. LNG-IUS is a highly effective contraceptive method that has the potential to yield savings for avoiding UP in 15 to 19-year old adolescents in the Brazilian Public Health care system.

Optimal dynamic pricing of mobile data plans in wireless communications

With smartphones sweeping the world, customers use much more data service than voice service nowadays. Because mobile data service occupies much more network capacity than voice, wireless network is frequently congested. We build a dynamic cell phone plan control model where the service provider can decide a subset of plans to open at the beginning of each period. New customers can only subscribe open plans. The dynamic plan control problem is a stochastic programming problem where the system state dimension is exponential in the number of plans and periods. In this paper, we analyze the case when the number of customers approaches positive infinity. In this limiting case, we transform the stochastic dynamic programming problem to an equivalent integer linear programming problem. In a case study, we analyze a large mobile service provider in Asia using 10,000 real individual-level data. Sensitivity analysis implies that a mobile service provider whose initial market share is low can benefit more from the dynamic data plan control.

Financial Analysis of CYP2C19 Genotyping in Patients Receiving Dual Antiplatelet Therapy Following Acute Coronary Syndrome and Percutaneous Coronary Intervention.

Dual antiplatelet therapy is an established standard of care for patients with acute coronary syndrome (ACS) to reduce thrombotic risk. Reduced CYP2C19 activity impairs clopidogrel bio-activation and increases risk of adverse clinical outcomes. Patients with poor and intermediate CYP2C19 metabolizers treated with clopidogrel incur higher cardiovascular event rates, including myocardial infarction, stroke, and stent thrombosis, following ACS than patients with normal CYP2C19 function. Tests are available to identify the CYP2C19 genotype and can be used to support individualization of antiplatelet therapy. To estimate the financial impact of CYP2C19 genotyping in a theoretical cohort of 1,000 patients with ACS, who received percutaneous coronary intervention and coronary stent implantation and were treated with clopidogrel, prasugrel, or ticagrelor in a managed care setting. Differences in overall and average cost per patient were estimated based on the rate of CYP2C19 genotyping in a theoretical cohort of 1,000 patients. Sensitivity analysis was carried out for varying costs, adherence, and the percentage of patients treated according to genotyping results. All clinical event costs were reported in terms of 2012 U.S. dollars. The budget impact analysis used published event rates from primary literature to estimate costs of events analysis for 3 different scenarios: Scenario A, no CYP2C19 genotyping; Scenario B, 50% of patients received CYP2C19 genotyping with appropriate treatment based on genotype; and Scenario C, 100% of patients received CYP2C19 genotyping with appropriate treatment based on genotype. According to this model, there was no change in the market share for the 3 antiplatelet agents in Scenario A. Initial market share for clopidogrel, prasugrel, and ticagrelor was 93%, 5%, and 2%, respectively; however, use of CYP2C19 genotyping is expected to shift market share from clopidogrel to either prasugrel or ticagrelor. In Scenario B, where 50% of the patients received genotyping, clopidogrel market share was reduced to 83%, while prasugrel increased to 12.1% and ticagrelor increased to 4.9%. In Scenario C, where all patients received genotyping, clopidogrel market share was reduced to 73%, prasugrel increased to 19.3%, and ticagrelor increased to 7.7%. Total estimated cost differences when all possible patients were genotyped included annual savings of roughly $444,852. Important financial benefits may be realized through use of genotype-guided antiplatelet therapy to reserve prasugrel or ticagrelor use for patients with reduced CYP2C19 activity to avoid costs associated with adverse cardiac events.

Abstract No. 522 - Evaluating the expected budget impact and cost-effectiveness of interventional therapies used in the treatment of chronic venous disease

Purpose Varicose veins (VV) and resulting sequelae contribute to morbidity assoc w/chronic vein disorders (CVD), impacting QOL and resulting in ~ $1B/yr. Total cost minimization and budget impact evaluation assessed 8-wk diff between Varithena ® (polidocanol endovenous microfoam [PEM]) vs alternate tx for VV in US from a 3rd-party payer perspective. Materials and Methods Tx options incl PEM, EVLA, RFA, surgery, and multi-modality tx, defined >1 tx on same day. Total cost components incl (wholesale) drug acquisition costs , pmt for professional (CMS physician fee schedule) and institutional (Hospital Outpatient Prospective Pmt System) services related to initial intervention, weighted for each modality, plus expected costs of addl interventions, weighted by corresponding rate of addl interventions, within 8-wk time frame. Evidence on rate of addl interventions for PEM came from 2 pooled, phase 3 studies, and for other modalities from US retrospective claims analysis of pts w/VV. Budget impact was modeled for hypothetical 1M member plan w/evidence-based assumptions: 76% adults, 6% chronic venous insufficiency prevalence, and 31% rate of interventional tx among pts w/dx VV, and derived in terms of total and per-member-per-month (PMPM) expenditure change given 5% initial PEM market share. Results PEM was expected to cost $2,165 (incl $615 (28%) for addl tx) compared to $2,374 (14% for addl tx) for surgery, $2,106 (32% for addl tx) for RFA, $1,827 (38% for addl tx) for EVLA, and $2,844 (26% for addl tx) for multi-modality tx. Budget impact for 1M member hypothetical health plan was $87k or $0.01 PMPM. Conclusion PEM is expected to have slightly lower addl tx rates than and cost ~ same as RFA and EVLA (performed alone) but be less costly than surgery and multi-modality tx (≥2 interventions on same day) for VV tx. Adding PEM to the formulary for a health plan is ~ budget neutral. Exp 8-wk Costs, Tx Options Comparator Initial tx costs Addtl tx rate Expected addtl tx cost Total expected costs PEM $1550 39.7% $615 $2165 EVLA $1130 52.4% $697 $1827 RFA $1430 40.0% $676 $2106 Surgery $2049 17.9% $325 $2374 Multi-modality tx $2107 34.9% $737 $2844

AN IMPROVED COURNOT COMPETITION MODEL: CONSIDERATION OF MARKET SHARE OBJECTIVE

Cournot competition model calculates profit by company's product quantity, but it does not take market share objective into consideration. It has obstacles of considering nonlinear aspects because the partial derivative equations are very hard to solve. Our algorithm both improves Cournot's model with consideration of market share ratio, and avoids the difficulty of solving several partial derivative equations directly. In our algorithm, we give a parameter σ to describe a company's consideration of market share objective, formulate the competition between companies, and calculate new market share ratio using parameter σ. We consider two network structures in our model: complete graph network and star graph network. For complete graph network, our calculation and numerical analysis is based on the case of 3 companies, but the result for general number of companies, n, is also discussed. We give a series of numerical results of new market share ratio after given the initial market share ratio and the parameter σ, and show that the initial market share ratio and new market share ratio are highly linear. Another important property in this network is the convergence of market share ratio when n goes to infinity. For star graph network, we give calculation for general cases and show that n = 3, 4 are the only numbers of companies that have positive increase of the market share ratio of the company.

Securitization, competition and monitoring

We analyze the impact of loan securitization on competition in the loan market. Using a dynamic loan market competition model where borrowers face both exogenous and endogenous costs to switch between banks, we uncover a competition softening effect of securitization that allows banks to extract rents in the primary loan market. By reducing monitoring incentives, securitization mitigates winner’s curse effects in future stages of competition thereby decreasing ex ante competition for initial market share. Due to this competition softening effect, securitization can adversely affect loan market efficiency while leading to higher equilibrium profits for banks. This effect is driven by primary loan market competition, not by the exploitation of informational asymmetries in the secondary market for loans. We also argue that banks can use securitization as a strategic response to an increase in competition, as a tool to signal a reduction in monitoring intensity for the sole purpose of softening ex ante competition. Our result suggests that securitization reforms focusing exclusively on informational asymmetries in markets for securitized products may overlook competitive conditions in the primary market.

Securitization, Competition and Monitoring.

We analyze the impact of loan securitization on competition in the loan market. Using a dynamic loan market competition model where borrowers face both exogenous and endogenous costs to switch between banks, we uncover a competition softening effect of securitization that allows banks to extract rents in the primary loan market. By reducing monitoring incentives, securitization mitigates winner’s curse effects in future stages of competition thereby decreasing ex ante competition for initial market share. Due to this competition softening effect, securitization can adversely affect loan market efficiency while leading to higher equilibrium profits for banks. This effect is driven by primary loan market competition, not by the exploitation of informational asymmetries in the secondary market for loans. We also argue that banks can use securitization as a strategic response to an increase in competition, as a tool to signal a reduction in monitoring intensity for the sole purpose of softening ex ante competition. Our result suggests that securitization reforms focusing exclusively on informational asymmetries in markets for securitized products may overlook competitive conditions in the primary market.

Evaluating Economic Warfare: Lessons from Efforts to Suppress the Afghan Opium Trade

In the mid-2000s, U.S. anti-opium policy intensified with a goal of reducing the resources available to Afghan insurgents. To achieve this objective, I show that opium suppression efforts must accurately distinguish between insurgent and non-insurgent suppliers. The required level of accuracy will be particularly high if demand for opium is inelastic and if the insurgents’ initial market share is large. Empirically, I show that demand for Afghan opium is relatively inelastic, that the market share of Taliban-heavy areas is large, and that enforcement has primarily impacted non-Taliban territory. Consequently, anti-opium efforts have significantly increased the drug-trade resources flowing to the Taliban.

Market Positioning of Varieties in World Trade: Is Latin America Losing Out on Asia?

There is increasing empirical evidence that trade specialisation and competition takes place in varieties rather than in products or industries. This paper examines recent changes in the export specialisation of Latin America and the Caribbean (LAC) and their Asian competitors by looking at their vertical specialisation through prices. Three price (or quality) segments are distinguished to compare export performance between the two regions using our BACI database, which provides harmonised bilateral unit values for most countries in the world at the most disaggregated product-level (5,000 products) for the period 1995 to 2004. The technology-content of products is also taken into account. The evidence suggests that LAC is losing out on China which is gaining large market shares, notably in the low-quality segment and low-tech segment. However, LAC has retained its initial overall market share, by slightly upgrading the quality and technology content of its exports. Our estimates of similarities in export structures confirm that varieties exported by the two continents are very different. Moreover, LAC export prices are much higher than those of China, but relatively similar to the ones of other Asian nations. Finally, we analyse the determinants of unit values of Latin American and Asian exports. Econometric tests confirm that the type of global competition differs between the two regions: prices play a bigger role in the case of Asian exports, whereas Latin America competes more on quality in world markets.