For information about the alert system methodology go here
Giebelhausen, M., H. H. Chun, J. J. Cronin Jr and G. T. M. Hult (2016): Adjusting the Warm-Glow Thermostat: How Incentivizing Participation in Voluntary Green Programs Moderates Their Impact on Service Satisfaction, Journal of Marketing, 80(4), pp. 56-71
In Study 1, the authors find that people are more satisfied with a service experience when they choose to participate in the provider’s voluntary green program (e.g., recycling)–an effect mediated by the “warm glow” of participation. The downside, however, is that this same mechanism decreases satisfaction among people who choose not to participate. In Study 2, analysis of data from the J.D. Power Guest Satisfaction Index suggests that incentivizing the program (i.e., compensating the program participants) paradoxically increases satisfaction for those who do not participate but decreases satisfaction among those who do. Studies 3 and 4 explore how manipulating incentive characteristics might enable managers to maximize satisfaction for both groups. Study 3 indicates that, compared with no incentive, an “other-benefiting” incentive increases warm glow and satisfaction for green program participants but decreases them among nonparticipants. Study 4, however, suggests that mixed incentive bundles (i.e., providing both self-benefiting and other-benefiting options) maximize warm glow and satisfaction for both groups–the ideal outcome for managers.
Link: http://dx.doi.org/10.1509/jm.14.0497
Foubert, B. and E. Gijsbrechts (2016): Try It, You’ll Like It-Or Will You? The Perils of Early Free-Trial Promotions for High-Tech Service Adoption, Marketing Science, 35(5), pp. 810-826
The proliferation of free trials for high-tech services calls for a careful study of their effectiveness, and the drivers thereof. On one hand, free trials can generate new paying subscribers by allowing consumers to become acquainted with the service free of charge. On the other hand, a disappointing trial experience might alienate potential customers, when they decide not to adopt the system and are lost for good. This dilemma is particularly worrisome in early periods, when service quality has not been ‘tried and tested’ in the field, and breakdowns occur. We accommodate these phenomena in a model of consumers’ free-trial and regular adoption decisions. Among other effects, it incorporates usage- and word-of-mouth-based learning about quality in a setting where quality itself is evolving. Consumers are forward-looking in that they account for changes in quality and anticipate uncertainty reduction due to trial usage. We estimate our model and run simulations on the basis of a rich and unique data set that incorporates customers’ trial subscription, adoption, and usage behavior for an interactive digital television service. The results underscore that free trials constitute a double-edged sword, and that timing and consumers’ usage intensity during the trial are key to the effectiveness of these promotions. Implications for managers are also discussed. Data, as supplemental material, are available at .
Link: http://dx.doi.org/ 10.1287/mksc.2015.0973
Sungwook, M. I. N., Z. Xubing, K. I. M. Namwoon and R. K. Srivastava (2016): Customer Acquisition and Retention Spending: An Analytical Model and Empirical Investigation in Wireless Telecommunications Markets, Journal of Marketing Research, 53(5), pp. 728-744
Strategic resource allocation in growth markets is always a challenging task. This is especially true when it comes to determining the level of investments and expenditures for customer acquisition and retention in competitive and dynamic market environments. This study develops an analytical model to examine firms’ investments in customer acquisition and retention for a new service; it develops hypotheses drawing on analytical findings and tests them with firm-level operating data of wireless telecommunications markets from 41 countries during 1999-2007. The empirical investigation shows that a firm’s acquisition cost per customer is more sensitive to market position and competition than retention cost per customer. Furthermore, whereas firms leading in market share, on average, do not have a cost advantage over other firms in retaining customers, they have a substantial cost advantage in acquiring customers, and this advantage tends to increase with market penetration. The study results provide guidelines for firms’ strategic resource allocation for customer acquisition and retention in competitive service markets.
Link: http://dx.doi.org/ 10.1509/jmr.14.0170
Pera, R., G. Viglia and R. Furlan (2016): Who Am I? How Compelling Self-storytelling Builds Digital Personal Reputation, Journal of Interactive Marketing, 35(), pp. 44-55
The work explores whether self-storytelling is a powerful predictor of personal reputation in a collaborative community of the sharing economy realm. By proposing that powerful self-storytelling allows an attractive positioning in respect to potential others, the paper extends the literature of brand storytelling and brand archetypes shifting the perspective to a personal level. This study adopts a qualitative–quantitative approach to investigate the meanings and stories contained in personal profile descriptions and their relation with reputation. Personal descriptions are interpreted as storytelling activities, labels/glosses that allow members to access the services of the community by facilitating personal reputation building. The findings show that powerful storytelling structures have defined phases and are crucial in reputation building when the story evolves in a metaphoric, symbolic lesson. The presence of archetypes, in particular the Sage and the Ruler, also confers reputational power to the stories. The results reveal opportunities for peer-to-peer communities, traditional companies, and social businesses. Marketers should design tools and platforms able to trigger consumers’ desire to express their individuality through personal descriptions and suggest the drivers that affect reputation.
Link: http://dx.doi.org/ 10.1016/j.intmar.2015.11.002
Guajardo, J. A., M. A. Cohen and S. Netessine (2016): Service Competition and Product Quality in the U.S. Automobile Industry, Management Science, 62(7), pp. 1860-1877
We study the impact of service attributes (warranty length, after-sales service quality) on consumer demand in the U.S. automobile industry, examining the presence of complementarities/substitution between service attributes and product quality. Our results estimate a median willingness to pay for one year of a warranty of approximately $850, which is equivalent to 3.1% of the median vehicle price in our sample. We find that, for a car with median characteristics, the effect on consumer utility of a 1% price decrease is equivalent, all else being equal, to increasing product quality by 2.2%, and is in turn equivalent to increasing the warranty length by 8%. Our results also indicate that service attributes play a compensatory role with respect to product quality; i.e., the impact of warranty length and service quality on demand increases when product quality decreases. Conversely, both service metrics are complementary with respect to demand; i.e., the better the service quality, the higher the marginal effect of longer warranties. Our results thus imply that, in our period of analysis, warranties played a more important role for American firms than for foreign firms, consistent with the fact that American manufacturers exhibited lower product quality and higher service quality than non-American firms. This paper was accepted by Martin Lariviere, operations management.
Link: http://dx.doi.org/ 10.1287/mnsc.2015.2195
Bassamboo, A. and R. S. Randhawa (2016): Scheduling Homogeneous Impatient Customers, Management Science, 62(7), pp. 2129-2147
Customer impatience has become an integral component of analyzing services, especially in the context of call centers. Typically, when customers arrive to such systems, they seem identical or homogeneous; however, from the system’s perspective, as they wait in the queue, their residual willingness to wait changes. For instance, a customer who has already waited for 10 minutes may have a different residual willingness to wait compared with a customer who has only waited for 1 minute. In this manner, as time progresses, customers become differentiated on their estimated patience levels. We exploit this dimension of customer heterogeneity to construct scheduling policies in overloaded systems that dynamically prioritize customers based on their time in queue to optimize any given system performance metric. Interestingly, the optimal policy has a very simple structure, and we find that implementing it can lead to significant improvements over the first-come, first-served policy. This paper was accepted by Noah Gans, stochastic models and simulation.
Link: http://dx.doi.org/ 10.1287/mnsc.2015.2241
Afèche, P. and J. M. Pavlin (2016): Optimal Price/Lead-Time Menus for Queues with Customer Choice: Segmentation, Pooling, and Strategic Delay, Management Science, 62(8), pp. 2412-2436
How should a firm design a price/lead-time menu and scheduling policy to maximize revenues from heterogeneous time-sensitive customers with private information about their preferences? We consider a queueing system with multiple customer types that differ in their valuations for instant delivery and their delay costs. The distinctive feature of our model is that the ranking of customer preferences depends on lead times: patient customers are willing to pay more than impatient customers for long lead times, and vice versa for speedier service. We provide necessary and sufficient conditions, in terms of the capacity, the market size, and the properties of the valuation-delay cost distribution, for three features of the optimal menu and segmentation: pricing out the middle of the delay cost spectrum while serving both ends, pooling types with different delay costs into a single class, and strategic delay to deliberately inflate lead times. This paper was accepted by Assaf Zeevi, stochastic models and simulation.
Link: http://dx.doi.org/ 10.1287/mnsc.2015.2236
