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Author: So Yeon Chun
Publisher:
ISBN:
Category :
Languages : en
Pages : 46
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Book Description
We study the interaction between the design of a premium-status loyalty program, revenue management, and strategic consumer behavior. Specifically, we consider a contemporaneous change where firms across several industries switch their loyalty programs from quantity-based to spending-based designs. This change has been met with fierce opposition from the media and consumers. We present a model for strategic, forward-looking, and status-seeking consumers' decisions on how much to purchase over a certain time period, and endogenously derive strategic consumer demand as a function of the firm's prices and loyalty program decisions. We then incorporate such demand into the firm's pricing and loyalty program design problem and compare different loyalty program designs. We identify the conditions under which, by coordinating pricing and loyalty decisions, the firm can benefit from strategic consumer behavior, and show that by switching to a spending-based design, the firm can benefit from strategic behavior even more, under broader conditions, and in a Pareto-improving way. We also analyze combined designs, which utilize quantity and/or spending requirements, and provide additional insights on how the firm can better manage the transition toward spending-based designs, possibly minimizing negative consumer reactions.
Author: So Yeon Chun
Publisher:
ISBN:
Category :
Languages : en
Pages : 46
Get Book Here
Book Description
We study the interaction between the design of a premium-status loyalty program, revenue management, and strategic consumer behavior. Specifically, we consider a contemporaneous change where firms across several industries switch their loyalty programs from quantity-based to spending-based designs. This change has been met with fierce opposition from the media and consumers. We present a model for strategic, forward-looking, and status-seeking consumers' decisions on how much to purchase over a certain time period, and endogenously derive strategic consumer demand as a function of the firm's prices and loyalty program decisions. We then incorporate such demand into the firm's pricing and loyalty program design problem and compare different loyalty program designs. We identify the conditions under which, by coordinating pricing and loyalty decisions, the firm can benefit from strategic consumer behavior, and show that by switching to a spending-based design, the firm can benefit from strategic behavior even more, under broader conditions, and in a Pareto-improving way. We also analyze combined designs, which utilize quantity and/or spending requirements, and provide additional insights on how the firm can better manage the transition toward spending-based designs, possibly minimizing negative consumer reactions.
Author: Evert R. de Boer
Publisher: Springer
ISBN: 3319626000
Category : Business & Economics
Languages : en
Pages : 290
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Book Description
This book offers the first comprehensive exploration of frequent flyer programs. By combining academic research with extensive insights and examples from the actual business world, it explores the key drivers and strategies of airline loyalty marketing today in an unprecedented manner. Strategy in Airline Loyalty also explores how the programs have evolved over time from marketing programs to financial powerhouses, identifying both the catalysts for change, as well as the strategic options and underlying trade-offs available to airlines. Covering diverse angles ranging from behavioral economics, to accounting, and structural design, the book reviews every core aspect of frequent flyer programs and offers extensive frameworks and definitions. The book provides a useful and complete reference for researchers, and helps those interested in frequent flyer programs to develop a better understanding of their past, present and future.
Author: Gabe Zichermann
Publisher: Wiley
ISBN: 047061868X
Category : Business & Economics
Languages : en
Pages : 288
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Book Description
Harness the power of games to create extraordinary customer engagement with Game-Based Marketing. Gamification is revolutionizing the web and mobile apps. Innovative startups like Foursquare and Swoopo, growth companies like Gilt and Groupon and established brands like United Airlines and Nike all agree: the most powerful way to create and engage a vibrant community is with game mechanics. By leveraging points, levels, badges, challenges, rewards and leaderboards – these innovators are dramatically lowering their customer acquisition costs, increasing engagement and building sustainable, viral communities. Game-Based Marketing unlocks the design secrets of mega-successful games like Zynga’s Farmville, World of Warcraft, Bejeweled and Project Runway to give you the power to create winning game-like experiences on your site/apps. Avoid obvious pitfalls and learn from the masters with key insights, such as: Why good leaderboards shouldn’t feature the Top 10 players. Most games are played as an excuse to socialize, not to achieve. Status is worth 10x more than cash to most consumers. Badges are not enough: but they are important. You don’t need to offer real-world prizing to run a blockbuster sweepstakes. And learn even more: How to architect a point system that works Designing the funware loop: the basics of points, badges, levels, leaderboards and challenges Maximizing the value and impact of badges Future-proofing your design Challenging users without distraction Based on the groundbreaking work of game expert and successful entrepreneur Gabe Zichermann, Game-Based Marketing brings together the game mechanics expertise of a decade’s worth of research. Driven equally by big companies, startups, 40-year-old men and tween girls, the world is becoming increasingly more fun. Are you ready to play?
Author: Ting Li
Publisher:
ISBN:
Category : Consumers' preferences
Languages : en
Pages : 202
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Book Description
The recent pervasive adoption of modern IT in the marketplace has profoundly changed information availability to customers and firms. This improved information endowment results in changes in consumer behavior and corporate strategy. This dissertation proposes new theoretical perspectives - firm informedness, customer informedness, and informedness through learning - to re-conceptualize the decision making process of customer-centric revenue management. It consists of three studies. First, using multiple cases in which firms adopt smart cards and mobile technologies in America, Europe, and Asia, we examine the value creation process of the firm using the explanation of firm informedness and investigate how it advances revenue management. Second, we test the theory of consumer informedness and examine heterogeneity in consumer preferences using stated choice experiments. We find the evidence for trading down and trading out behavior and show that the use of mobile ticketing technologies can help firms to build a hyper-differentiated transport market. Finally, using a computational simulation, we explore the opportunity for devising service offerings to capture profitable consumer responses, considering demand-driven revenue and capacity-management. Overall, this research introduces methods, models, and guidelines for organizations to strategize the informational challenge, make informed decisions, and create transformational values to win in today's competitive network environment.
Author: Binyamin Mantin
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Navaporn Surasvadi
Publisher:
ISBN:
Category :
Languages : en
Pages : 372
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Book Description
Author: Wayne Taylor
Publisher:
ISBN:
Category :
Languages : en
Pages : 144
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Book Description
Loyalty programs have exploded in popularity in recent decades. In the United States alone, membership has reached 1.3 billion (Ferguson and Hlavinka, 2007). In spite of their continued popularity, the effectiveness of these programs has been long debated in the literature, with mostly mixed results. Verhoef (2003) finds that the effects are positive but very small, DeWulf et al. (2001) finds no support for positive effects of direct mail, Shugan (2005) finds that firms gain short term revenue at the expense of longer term reward payments, and Hartmann and Viard (2008) found no evidence of the loyalty program creating switching costs. Rather than attempt to broadly label loyalty programs as either effective or ineffective, this dissertation instead focuses on how firms can use their loyalty program databases to model customer behavior. In the first essay I investigate how positive and negative casino experiences influence the casino's targeting strategy. In the second essay I study a coalition loyalty program and use the variation in the coalition network size to estimate the value of store participation. Finally, I extend the first two essays and summarize the ongoing debate as to whether the human brain processes information using Bayesian inference. The intent of this research is to both contribute to academic literature and also provide insight for practitioners to improve decision making. In the first essay I consider the direct marketing targeting problem in situations where 1) the customer's experience quality level varies from occasion to occasion, 2) the firm has measures of these quality levels, and 3) the firm can customize marketing according to these measures and the customer's behaviors. A primary contribution of this paper is a framework and methodology that allows the manager to assess the marketing response of a forward-looking customer with any specific experience and behavior history, which in turn can be used to decide which customers to target for marketing. This research develops a novel, tractable way to estimate and introduce flexible heterogeneity distributions into Bayesian learning models with forward looking agents. The model is estimated using data from the casino industry, an industry which generates i more than $60 billion in U.S. revenues but has surprisingly little academic, econometric research. The counterfactuals offer interesting findings on gambler learning and direct marketing responsiveness and suggest that casino profitability can increase substantially when marketing incorporates gamblers' beliefs and past outcome sequences into the targeting decision. In the second essay I consider the problem faced by managers of coalition loyalty programs of store network composition. In a coalition loyalty program, managers need to determine which stores to include in the coalition network. The value of a particular store may depend on both the changes in projected member spend at the focal store and the changes in spend at the other stores in the network. The primary contribution of this research is a model that can measure these same-store and cross-store effects. These cross effects can be used to determine the extent of spillover both to and from a focal store from other stores in the network. I estimate the model using data from a coalition network in Europe and find that there are substantial cross-store effects. The findings have substantial implications for managers: even if an individual store is not contributing much revenue to the coalition its presence in the network can positively influence the network as a whole substantially. In the extension I summarize the recent debate as to whether or not the human brain processes information in a Bayesian fashion and propose potential departures from rational Bayesian inference. I then present models of these departures and review the characteristics of the data sources that would be ideal in estimating these effects. This extension builds on the first two essays by 1) exploring more deeply the learning model presented in the first essay and 2) presenting models that may account for the potential imperfect recall and incomplete knowledge that was assumed in the second essay. The goal of the extension is to highlight how a clear understanding of how the brain operates and processes new experiences could have drastic implications for a loyalty program's design and targeting marketing strategy.
Author: Robert G. Cross
Publisher: Crown Currency
ISBN: 0307788989
Category : Business & Economics
Languages : en
Pages : 289
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Book Description
From the man the Wall Street Journal hailed as "the guru of Revenue Management" comes revolutionary ways to recover from the after effects of downsizing and refocus your business on growth. Whatever happened to growth? In Revenue Management, Robert G. Cross answers this question with his ground-breaking approach to revitalizing businesses: focusing on the revenue side of the ledger instead of the cost side. The antithesis of slash-and-burn methods that left companies with empty profits and dissatisfied stockholders, Revenue Management overturns conventional thinking on marketing strategies and offers the key to initiating and sustaining growth. Using case studies from a variety of industries, small businesses, and nonprofit organizations, Cross describes no-tech, low-tech, and high-tech methods that managers can use to increase revenue without increasing products or promotions; predict consumer behavior; tap into new markets; and deliver products and services to customers effectively and efficiently. His proven tactics will help any business dramatically improve its bottom line by meeting the challenge of matching supply with demand.
Author: Jia Liu
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We empirically investigate consumer dynamics within a revenue-based loyalty program in which members are rewarded based on their accumulated spending. We study the impact of four program design features on member purchase behavior, including membership requirements, nonlinear point redemption thresholds, timing of rewards, and point expiration policy. We also study how the effect of these programs features depends upon the firm's promotion activities. We find evidence of a point/time pressure effects for membership renewal and obtaining a reward. We also find that as the value per point increases across nonlinear thresholds, members exert greater effort for larger rewards. We also find that both delayed rewards and membership renewal requirements can create a lock-in effect because members continue purchasing more, even after accomplishing the goal. Lastly, we find that members are less promotion sensitive when facing larger point and/or time pressure. Accordingly, we run simulations to compare different personalized promotion strategies that leverage a member's status in the program and her promotion sensitivity. Our research provides important implications for firms about loyalty program design and personalized marketing.
Author: Haiyue Liu
Publisher: Frontiers Media SA
ISBN: 2832520561
Category : Science
Languages : en
Pages : 411
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Book Description
