Abstract: Analysis of actual transactions in a grocery store show that households enrolled in U.S. government’s Supplementary Nutritional Assistance Program (SNAP) purchase more unhealthy hedonic food, compared to food secure households. SNAP households purchased more unhealthy hedonic food regardless of whether they used government funds or cash to pay for their purchases. Three follow-up simulated grocery shopping studies were designed to understand the mechanisms underlying this food consumption pattern by SNAP households. SNAP households, compared to food secure households, reported stronger food craving. Stronger food craving was associated with lower unhealthiness perception of hedonic food. Overall, the results suggest that food cravings can reduce perceptions of unhealthiness and thus increase unhealthy food purchases. Interventions that reduce the effect of food cravings on shopping decisions might reduce unhealthy consumption.

Abstract: The crisis created by the COVID-19 pandemic was unprecedented as it adversely affected everyone and represented a black swan event. Firms implemented marketing strategies to counter its negative effects. Some took a socially responsible approach by making monetary and in-kind contributions to customers, employees, and nonprofits. Others took a fiscally conservative approach by instituting employee pay cuts, layoffs, furloughs, and executive compensation cuts. Considering the magnitude and unique nature of the crisis, there is an important need to determine whether responding to it was financially beneficial, and if so, to identify the superior strategic approach. We therefore conducted an event study of firms that announced new strategies in response to this black swan macro-crisis. We find that investors rewarded agile firms that took swift action. However, investors preferred firms that chose to focus on their own survival by reducing costs and preserving cash flow through fiscally conservative strategies.

Abstract: Online reviews play an important role in consumers’ purchase journeys and therefore have received considerable research attention. Yet research is limited as to whether and how a reviewer’s gender affects persuasiveness. In response, we analyze more than one million reviews posted on the website Yelp and find that an author’s gender indeed affects review text and, consequently, persuasiveness. Specifically, we find that (1) reviews posted by women (vs. men) are more authentic, less analytical, more positive-affective, and less negative-affective and (2) authentic, analytical, negative-affective text increases the persuasiveness of reviews while positive-affective text lowers it. We also find that the persuasiveness of reviews from women (vs. men) depends on product category, suggesting that retailers should consider the product category and authors’ gender when ranking reviews.

Abstract: Existing research demonstrates that industry competitiveness influences the effectiveness of marketing actions. However, limited scholarly attention has been paid to how service companies should communicate on social media under different levels of industry competitiveness. The current research seeks to address this gap in the literature by analyzing social media communication, brand impression, and financial data from two large samples of service companies and by employing state-of-the-art methods of machine learning. Study 1 demonstrates that industry competitiveness positively (negatively) moderates the impact of persuasive tone (volume) of social media communications on company value. We argue that these effects stem from investors’ expectations about the impact of these communication styles in facilitating differentiation and improving brand impressions in a congested competitive environment. Consistent with this mechanism, Study 2 reveals that as an industry becomes more cluttered, persuasive tone (volume) becomes more (less) effective in impacting consumers’ brand impressions. The findings provide important insights for service companies that operate under different levels of industry competitiveness.

Keywords: social media communication, industry competitiveness, company value

Abstract: Online equity markets have significantly changed the dynamics of connecting angels and individual equity investors to new ventures that seek early-stage capital. However, for those early-stage investors, information pointing to the success of business-to-business (B2B) new ventures (B2BNVs), which deal with a complex organizational field, is scattered and disconnected. This paper focuses on social media narratives (SMNs) as a source of insight for such investors and proposes that predicting a B2BNV’s likelihood of success requires a comparative view, i.e., a comparison of its SMNs with those of its competitors and customers. We expect higher (lower) lingual similarity in the early stages between a B2BNV’s SMNs and those of its prospective customers (competitors) to predict its success. Using a longitudinal panel of 574 B2BNVs resulting in more than 2,700 venture round observations, we find that a comparative view of a venture’s SMNs can give early-stage investors reliable predictions about the B2BNV’s ability to manage its market presence and its subsequent success in later stages. Our models show that a comparative view of SMNs increases the accuracy of predicting a B2BNV’s later-stage fundraising success by an average of 15 percent. Furthermore, the predictive models can reliably point to a successful market presence in the later stages, including the landing of customers, the winning of awards and competitions, the receiving of endorsements, the generating of revenue, and the successful patenting of products. Our study contributes to existing literature that focuses on business impacts of social media by demonstrating the usefulness of comparative linguistics in social media analytics, i.e., comparing the firm’s social media communications to those of its competitors and business customers, in the prediction of the entrepreneurial firm’s success.

Keywords: Social Media Narratives, Lingual Similarity, Fundraising Success, New Venture, Social Media Analytics.

Abstract: How does feeling powerless (vs. powerful) affect variety-seeking in retail contexts? Based on the notion that feeling powerless is associated with lesser autonomy and building on studies showing that having a wider choice set enhances autonomy, we predict—consistent with research on compensatory consumption—that low-power consumers (vs. those with high power) will exhibit greater variety-seeking. Findings across nine studies were consistent with this prediction. Further, while all nine studies provide evidence that low-power consumers seek greater variety, three studies (1A, 1B, and 1C) support the prediction that this effect is mediated by need for autonomy and not by any of eight other competing mechanisms, including other-orientation, need for uniqueness, and risk aversion. Studies 2 and 3 explore theoretically and managerially relevant ways, respectively, to reduce the tendency for low (vs. high) power consumers to seek greater variety, while study 4 provides external (real-world) validity for our prediction in retail (i.e., a restaurant) context. The theoretical and managerial implications of our research are discussed.

Keywords: power, need for autonomy, variety-seeking

Abstract: Anthropomorphic voice assistants (e.g., Amazon Alexa) enable users to use natural-language voice commands to control “smart” objects and access the internet for information, shopping, and entertainment. Most manufacturers of voice assistants allow other firms to develop software (i.e., voice assistant functions, VAFs) related to their products and services that add new capabilities to voice assistants. To measure the value of different types of capabilities of VAFs, we empirically study the impact of announcements of VAFs on firm value. We show that informational capabilities and VAFs announced by product retailers have a positive moderating effect on firm value. On the other hand, object-control capabilities have no moderating impact on firm value, while transactional capabilities have a negative impact. Theoretical and managerial implications are discussed. Additionally, necessary avenues for future research within the voice assistant domain are proposed.

Keywords: voice assistant functions, Internet of Things, smart speakers, event study, firm value

Abstract: The fast-paced growth of e-commerce is rapidly changing consumers’ shopping habits and shaping the future of the retail industry. While online retailing has allowed companies to overcome geographic barriers to selling and helped them achieve operational efficiencies, offline retailers have struggled to compete with online retailers, and many retailers have chosen to operate both online and offline. This paper presents a review of the literature on the interaction between e-commerce and offline retailing, highlighting empirical findings and generalizable insights, and discussing their managerial implications. Our review includes studies published in more than 50 different academic journals spanning various disciplines from the inception of the internet to present. We organize our paper around three main research questions. First, what is the relationship between online and offline retail channels including competition and complementarity between online and offline sellers as well as online and offline channels of an omnichannel retailer? Under this question we also try to understand the impact of e-commerce on market structure and what factors impact the intensity of competition /complementarity. Second, what is the impact of e-commerce on consumer behavior? We specifically investigate how e-commerce has impacted consumer search, its implications for price dispersion, and user generated content. Third, how has e-commerce impacted retailers’ key managerial decisions? The key research questions under this heading include: (i) What is the impact of big data on retailing? (ii) What is the impact of digitization on retailer outcomes? (iii) What is the impact of e-commerce on sales concentration? (iv) What is the impact of e-commerce and platforms on pricing? And (v) How should retailers manage product returns across online and offline channels? Under each section, we also develop detailed recommendations for future research which we hope will inspire continued interest in this domain.

Keywords: retailing, online, offline, e-commerce

Abstract: Retailers that sell seasonal products face significant challenges when planning inventory assortment. The incorporation of drop-shipping into their operations, wherein suppliers own and ship products directly to consumers at retailers’ requests, has only complicated these challenges. This study investigates multichannel assortment planning of retailers that sell seasonal products. We first capture structural properties of multichannel retailing of seasonal products through a simple and parsimonious analytical model. The analytical model uncovers key seasonal product attributes that make it more attractive for retailers to allocate a product for sale in the drop-shipping channel than in the store channel. We then empirically assess the findings of the analytical model. Using a rich and unique dataset from the fashion retail industry, we test relationships between product attributes and retailers’ channel choice. The application of a generalized linear latent and mixed model controls for selection bias by jointly estimating retailers’ likelihood of allocating a product’s inventory to the drop-shipping channel and the allocated volume in each channel according to the product’s characteristics. The empirical findings suggest that retailers are less likely to drop-ship products that are colored, irregularly sized, and offered in more style variants. They also unveil cross-channel effects in terms of inventory amounts allocated for sale in each channel according to those characteristics. Our analytical and empirical assessments jointly demonstrate the complementary roles played by drop-shipping and store channels for seasonal products and offer important academic and practical implications.

Keywords: Retailing; Channel choice; Inventory assortment; Drop-shipping; Seasonal products.

Abstract: The ways in which emergent technologies are disrupting retailing are manifold. The Internet, social media, mobile technologies, augmented reality, artificial intelligence, robotics, and natural user interfaces all combine to grant consumers access to more information and channels than ever before, through virtually seamless connections with retailers, competitors, and other consumers. The resulting transformations, due to such technologies, thus are widespread, affecting retail marketplaces, the retailing industry, retail real estate, and consumers’ behaviors in terms of where and how they shop for products and services. In response to these changing circumstances, retailers develop innovative strategies and new business models in their efforts to enter, expand, and defend their markets. This special issue offers some insights, with the objective of motivating researchers to undertake in-depth investigations of the effects of new, emergent technologies, on both retailers and evolving consumer behaviors.

Abstract: Firms are increasingly turning to social media platforms for complaint handling. Past research and practitioners’ reports highlight the benefits of complaint handling on social media, urging firms to provide prompt and detailed responses to complaints. However, little research has explored the possible drawbacks of such practices, especially when responses inadvertently further publicize complaints. Utilizing two unique data sets in a series of observational and quasi-experimental analyses, this research provides the first evidence of complaint publicization in social media, a phenomenon in which firm responses to complaints on popular social media platforms increase the potential public exposure of complaints. This negative effect can outweigh any positive customer care-signaling impact from firm responses. The authors show that a response strategy that engenders a high level of complaint publicization – e.g., providing detailed responses through multiple communication exchanges with a complainant – could negatively impact perceived quality and firm value, diminish the positive impact of a firm’s own posts, and increase the volume of future complaints. Additional analyses reveal that these adverse impacts are stronger for firms that are targeted by retail investors. The authors also uncover specific response strategies and styles that could mitigate these effects.

Keywords: Complaint publicization, complaint handling, social media, perceived quality, firm value

Abstract: Retailing academics and practitioners must develop close, collaborative relationships, which might involve various, meaningful efforts to assist the other side of the collaboration while also furthering their own respective objectives. Only through such collaborations can retailing ensure sufficient research rigor and relevance to advance the field and expand its reach to nonacademic audiences. To achieve some innovative insights on why and how academics and practitioners can work together, a thought leadership conference was organized at the Walton College of Business (University of Arkansas), and one of its key outcomes is this special issue. All the entries in this special issue were crafted by teams of academics and practitioners, working together to describe new frontiers in retailing. They worked collaboratively for more than a year on topical, timely, relevant topics for today’s technology-based era. The meaningful results should provide inspiration for more collaborations, pursued by both sides, with the support of university administrators and corporate executive leadership. Without the support of both, bridging the gap between research and practice is not possible.

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Abstract: Medicare uses a pay-for-performance program to reimburse hospitals. One of the key input measures in the performance formula is patient satisfaction with their hospital care. Physicians and hospitals, however, have raised concerns especially about questions related to patient satisfaction with pain management during hospitalization. They report feeling pressured to prescribe opioids to alleviate pain and boost satisfaction survey scores for higher reimbursements. This over-prescription of opioids has been cited as a cause of current opioid crisis in the US. Due to these concerns, Medicare stopped using pain management questions as inputs in its payment formula. We collected multi-year data from six diverse data sources, employed propensity score matching to obtain comparable groups, and estimated difference-in-difference models to show that, in fact, pain management was the only measure to improve in response to pay-for-performance system. No other input measure showed significant improvement. Thus, removing pain management from the formula may weaken the effectiveness of HVBP program at improving patient satisfaction, which is one of the key goals of the program. We suggest two divergent paths for Medicare to make the program more effective.

Keywords: Healthcare; Patient satisfaction; Hospital value-based purchasing (HVBP); Opioid crisis; Pain management.

Abstract: The world of retailing is being reimagined and transformed at breakneck speeds due to new technologies, as well as due to changes in consumer purchasing behavior resulting from the COVID-19 pandemic. This dynamic retail marketplace is forcing retailers to strategize how to best position themselves to survive and flourish in this environment. Recognizing that we are at a critical inflection point in the world of retailing, we conceptualize a Strategic Wheel of Retailing in the new technology era that emphasizes technology as the core enabler of the strategies related to the 6Ps of retailing (retail place and supply chain management, product, pricing, promotion, personnel, and presentation). In particular, the articles calls for retailers to carefully their review their competitive ecosystem as they adapt to the new technologies, raises some issues, and offers new directions for further research on how technology can be leveraged to design profitable retail strategies.

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Abstract: Temporal distance refers to the time between purchase and consumption in advanced-sales industries. We explore how the response of aggregate demand to price changes with temporal distance in a large, proprietary dataset of Florida cruise prices, bookings, and product attributes. We offer the first evidence that cruise demand becomes more sensitive to price during the advance sales period, unlike extant findings in other settings. The results also show that demand is greatest late in the advance-sales period, providing the first finding that a late-season high-demand period coincides with a late-season increase in aggregate price sensitivity. The high-demand effect more than offsets the high-price-responsiveness pattern, leading the firm to increase prices throughout the advance-sales period. Although the data do not disentangle multiple competing explanations for the main findings, they are large enough to appear in simple data visualizations and robust enough to replicate across many model specifications, parameterizations and partitions of the data.

Keywords: Advance Sales, Cruise, Price Responsiveness, Temporal Distance, Market Differentiation, Instrumental Variables

Abstract: In this paper, the authors review current literature on retail formats and propose a new customer-centric framework for retailers to focus on as they continue to innovate and evolve. Specifically, they review the literature on how formats compare in their attributes and compete with each other; the role of customer behavior in format choice; and developments in multichannel and omnichannel retailing. They propose a framework for retail formats suggesting two paths – either reduce friction in the customer journey or enhance customer experience. They discuss the challenges faced by offline (physical store-first) and online (digital-first) retailers and elaborate on strategies each type of retailer is pursuing to address these challenges. Finally, they offer directions for future research in this domain. They conclude by calling for newer digital-first and physical-first players to continue coming up with different customer-centric formats, which they predict will slowly morph into integrated retailers, leaving space for newer players to enter the market and hence keep the wheel of retailing spinning.

Keywords: Retailing, Retail Formats, Online Retail, Omnichannel, e-Commerce

Abstract: A large body of academic research has recently focused on omnichannel retailing especially on brick-and-mortar (offline) retailers adding and integrating online capabilities. Relatedly, trade press has highlighted how offline retailers have been investing heavily in the use of their existing physical retail network for quicker delivery and pick-up of online orders. Looking at the competition between Amazon and Walmart, however, we demonstrate that focusing on quicker delivery is not the best strategy for offline retailers when opening online channels to compete with online retailers. We estimate a multivariate probit model using data from a customer survey and find that offline retailers should instead focus on delivering the fundamentals of retailing to their online customers too – larger assortment, competitive prices, and purchase convenience. Further, we employ cluster analysis to show which demographics are good targets for retailers as they develop omnichannel capabilities, as well as which demographics retailers need to keep loyal to their original channels.

Keywords: Omnichannel retailing; Retail patronage; Store choice; Delivery; Customer segmentation

Abstract: The leisure cruise industry has enjoyed high levels of growth for nearly five decades due in part to traveler interest in the cruise experience, but also to relatively lower pricing. Although revenue management of cruise fares is now standard practice, there are untapped opportunities to improve yields through data-driven market segmentation and third-degree price discrimination. This paper uses a finite mixture modeling approach to develop, empirically validate, and compare pricing models. By unveiling segments of travelers based on individual attributes, third-degree price discrimination can improve target marketing, the timing and appeal of price discounts, and the matching of variable demand with fixed, though differentiated, room supply. Empirical results from running thousands of simulations with pricing data from one of the world’s largest cruise lines show that the segmentation analysis using third-degree price discrimination can increase fare revenue more than four percent. The modeling approach used in this research extends the emerging literature on revenue management in the cruise industry and offers meaningful managerial implications for advanced pricing tactics and revenue management.

Keywords: Cruise Industry, Market Segmentation, Pricing, Revenue Management, Price Discrimination, Latent Class Analysis.

Abstract: A growing reliance on the Internet as an information source for experiential services raises the need for more research focusing on electronic word of mouth (eWOM). Drawing on construal level theory (CLT) and the sunk costs fallacy, we examine how psychological distance and prior investments in information search influence service consumers’ reactions to negative online reviews. Our findings indicate that when consumers perceive the service consumption to be psychologically proximal, temporal investments in information search prior to exposure to eWOM diminish the impact of negative eWOM on behavioral intentions. This effect is so robust that even a highly negative forum consensus does not mitigate it. Conversely, when the consumption experience is perceived as distal, temporal investments fail to buffer the negative impact of negative eWOM on behavioral intentions, and a highly negative forum consensus magnifies the impact of negative eWOM. Our findings have important implications for service firms, which may make many of their evaluations and decisions under the influence of psychological distance and sunk costs.

Keywords: Psychological distance, eWOM, sunk cost, services.

Abstract: Revenue management (RM) has received considerable attention from both academic and business professionals. It encompasses several techniques regarding capacity allocation, pricing, and resource management of fixed, time-sensitive capacity. RM can be roughly divided into two categories defined by the control mechanism that increases revenue: capacity allocation or price optimization. Our work falls in the latter category. In our model, we allow for partial substitutability among products (e.g., a customer making a purchase decision may consider multiple alternatives – different departure dates, different destinations, different cabin types). We also include marketing expense in addition to prices as a lever for increasing revenue. These features are relevant to dynamic pricing in practice. The method is illustrated with booking data from a cruise company, yielding optimal advertising and prices for 300 products. The application of the model results in an increase in revenue in the range of 8–20%.

Keywords: revenue management, cruise industry, multinomial choice model, empirical application

Abstract: The modern leisure cruise industry is one of the most dynamic and profitable sectors of the global tourism industry. However, the cruise industry has entered a maturity stage in North America, the largest cruise market in the world, as growth of the new-to-cruise segment slows. Industry analysts emphasize that cruise lines need to not only attract new customers, but also to motivate existing ones to repurchase. Achieving these dual goals demands a better understanding of the differences between these market segments. This study used proprietary reservation data containing more than one million individual records of cruisers’ demographic and behavioral information. Analysis showed that compared with new cruisers, repeat cruisers to a cruise brand are less price sensitive, live closer to embarking ports, are more likely to choose longer cruises and better cabin types, and to book cruises further out from the sailing date; in addition, there are notable behavioral differences between first-time and multi-time repeat cruisers.

Abstract:The Hospital Readmissions Reduction Program (HRRP) established by the Centers for Medicare & Medicaid Services (CMS) penalizes hospitals that have excessive readmission rates. Research is needed to determine if there are factors that influence readmission penalties but may be out of the control of hospitals. In this study, we compare a set of geo-demographic, hospital, and quality of care characteristics of hospitals penalized by HRRP with those not penalized, and determine these characteristics’ association with the likelihood of penalization as well as the extent of penalties. We collected and integrated data from multiple sources such as the HRRP Supplemental Data File, the Hospital Compare database, CMS Impact files, the HCAHPS survey, and the U.S. census. We followed a two-step estimation procedure. First, we estimated a logistic regression model to find the relationship between various characteristics and whether a hospital was penalized. Second, we estimated a linear regression model to find the relationship between these characteristics and the extent of penalties. Results show that both the likelihood and the extent of penalties varied across several characteristics related to geo-demographics (such as location in the census division, urban vs. rural location, and racial make-up of the area), hospitals (such as ownership, bed capacity, teaching status, and case mix index), and quality of care (such as quality of communication by doctors and information provided at the time of discharge). Although quality of care characteristics are under hospitals’ control and can be improved, geo-demographic and hospital characteristics are likely consistent over time and largely out of the control of hospitals. The study supports the case for a comprehensive revision of HRRP’s scoring methodology to calculate readmission penalties.

Keywords: Readmission penalties, geo-demographics, hospital ownership, case mix index, health information technology.

Abstract: The received wisdom, reflected in popular marketing textbooks, is that featuring deeply discounted items will generate additional store traffic for retailers that in turn will lead to increased sales and profits. However, there is surprisingly little systematic evidence about the impact of these deep discounts on aggregate store traffic, sales and profits. In this paper, we study the effects of promotional discounts and their characteristics on various store performance metrics employing a store level dataset pooled over 55 weeks and 24 stores. Many findings of our study lend credence to the continued popularity of such promotions by retailers. We find that feature promotions build store traffic, especially when the categories being featured are high penetration, high frequency. Also, promotions of branded items are found to be more effective than promotions of unbranded items. Discounting on more items in a category leads to lower store margins suggesting that the cost of discounting a large proportion of items in a category may not be justified by the profits generated by the sale. Using the coefficients from our model estimates, various counterfactuals provide insights into strategic change in level of discounts across categories. We discuss several implications of our findings for retailers.

Keywords: Promotional Discounts, Store Performance, Loss Leader, Scanner Data

Abstract: In this study, we focus on measuring the efficiency of category level sales response to promotions across various categories and stores. Our heterogeneous stochastic frontier model allows us to attribute portions of this efficiency to specific characteristics of the stores and categories. Using our full PEM (promotional efficiency frontier) model, we analyze the efficiency of twenty frequently bought categories of a supermarket retailer and applying it to store-category level data. We find that the average efficiency of category and store sales response across all categories and stores is 84.34%, with low values in categories such as Spreads and Fresh Seafood to high values in categories such as Frozen entrees and Meat. We find that the variation in efficiency of this sales response can be attributed to specific store and category characteristics such as selling area of store, distance to competition, number of SKUs in the category and average interpurchase time. Unobserved heterogeneity is captured by the latent class approach that provides support for the existence of three segments. An understanding of the roles played by these characteristics in the efficiency of sales response can aid managers in devising a strategy that maximizes sales.

Keywords: Efficient Frontier, Benchmarking, Efficiency Measurement, Retailing.

Abstract: In this study, we show that providing a low (vs. no) price discount can lower purchase propensity of low-priced products under certain conditions—when purchases are nonessential and purchase volume is small. Based on the theory of purchase value, we argue that offering a low price discount for nonessential purchases decreases perceived transaction value which in turn lowers consumers’ purchase propensity. However, this boomerang effect reverses when purchase volume is larger or when the purchase is essential. We demonstrate this effect with secondary scanner panel data sets (with six different product categories) and in five laboratory experiments (with real purchases). We also document the process and delineate boundary conditions.

Keywords: Low Discount, Price Promotion, Transaction Value, Acquisition Value

Abstract: This study explores three key dimensions (price search, human capital, and perceived benefits) as potential influencers of market mavenism by consumers. The effect of market mavenism on several managerially relevant and observable market outcomes, such as cross-store price savings and deal proneness, are explored. A primary data collection strategy that surveys consumers on their stated price search behavior and attitudes toward price search links explicitly with consumers’ actual, observed purchase behavior. Most of the variables constituting the three dimensions significantly influence market mavenism.

Keywords: Mavenism, Price Search, Empirical Analysis, Structured Equation Modeling

Abstract: Prior ingredient branding research has examined the influence of “stated” factors such as fit between partner brands on composite product (e.g., Tide with Downy fabric softener) attitudes. This research focuses on choice of composite products, and addresses three managerially relevant questions: Which consumer segments are more likely to adopt the composite product? Will the choice of the composite product have positive or negative reciprocal effects on partner brands? Will the introduction of the composite product benefit the primary or the secondary brand more? The authors use a brand choice model to investigate the “revealed” choice of complements-based composite products. Study results indicate that (i) despite high fit between the composite product and the primary brand, consumer segments may have different choice likelihoods for these products, whereas prior research suggests equal likelihood; (ii) the choice of a composite product may not provide a positive reciprocal effect to the secondary brand; and (iii) the introduction of a composite product may benefit the primary brand more than the secondary brand, whereas prior research suggests a symmetrical benefit for the partner brands. Finally, the finding that introducing a composite product may not cannibalize the sale of the primary brand extends the ingredient branding literature, which has been silent on this issue.

Keywords: Ingredient Branding, Brand Equity, Choice Models, Scanner Panel Data

Abstract: The cruise industry has evolved considerably and in recent years emerged to become one of the most rapidly developing segments of the global tourism industry, with millions of passengers cruising each year. On a global basis, the cruising sector is overwhelmed by North America. During recent years above average growth rates are reported in emerging cruise markets in the Asia Pacific region. As one of the core elements of the Asian cruise market, China is undergoing rapid growth in terms of both cruise ship visits and cruise tourists. However, limited research has been undertaken in regard to growth of cruising industry in China. The purpose of this article is to report current development of the cruise industry in mainland China. First, we briefly provide an overview of the worldwide cruise industry. Then, we summarize the history and the growth of the cruising sector in China; report characteristics of Chinese cruise passengers and compare them with others; highlight information on geographical distribution, berthing capacity and cruise business performance of each cruise port along China’s coastlines; and introduce various cruise policy documents issued by Chinese governments. Finally, we discuss some issues, challenges and relevant managerial implications for developing this niche form of tourism in this country.

Keywords: Cruise Industry, Cruise Tourism, Cruising, China

Abstract: Retail pass-through has been extensively analyzed analytically and empirically, and recent empirical work has stressed the importance of appropriate methodology and data for inferring correct retail pass-through. However the literature on retail pass-through has interpreted ‘pass-through’ as being confined to a specific product category, and only to brands within that category. This category restriction has been derived from a tradition of modeling retailers as ‘category profit maximizers’. Yet it is widely accepted that retailers strive to maximize profits across categories, with several categories specifically functioning as ‘loss leaders’. In this paper we argue that this pragmatic view of retailers makes it necessary to reevaluate retailer pass-through from being merely a ‘within category’ phenomenon to also a ‘cross category phenomenon’. Using a unique dataset we construct category price indices and empirically evaluate cross category pass-throughs with a variety of categories – selected on the basis of profitability. We find that by and large cross category pass-throughs tend to be negative (about 18 % as compared to 9% positive), i.e., price cuts in a focal category being accompanied by price increases in other categories. Category characteristics such as price elasticity and proportion of loss leaders increase the probability of negative cross-category pass-throughs. We conclude that future work on retailer pass-throughs needs to incorporate cross category analysis in order to capture the ‘true’ strategic behavior of the retailer.

Keywords: Retailer Pass-Through, Retail Pricing, Cross-Category Analysis, Retailing, Econometric models.

Abstract: With the increased competitive pressures in the grocery retailing industry, managers have greater interest in measuring the productivity of the stores of their own chain relative to the other similar stores. In this paper, we measure and compare the inefficiencies of major grocery retailers across various formats and pricing strategies using stochastic frontier (SF) methodology. Using a unique dataset covering 2500 stores across fifty chains, we find that the average inefficiency was about 28.59 %. Kroger and Wal-Mart are found to be the least inefficient chains with inefficiencies of 2.18 % and 3.06 % respectively. With respect to pricing strategy, EDLP and hybrid stores are found to do better than HiLo stores in generating weekly sales and with respect to format strategy, supercenters are found to do better than supermarkets and limited assortment stores. Using SF analysis, we also find that stores could potentially reduce the proportion of inputs such as selling area, number of checkout counters, number of employees and store features without threatening outcomes (i.e. by holding the output level constant).

Keywords: Retailing; Benchmarking; Stochastic frontier; Retail formats; Efficiency

Abstract: The authors empirically examine the effect of gas prices on grocery shopping behavior using IRI panel data from 2006–2008, which track panelists’ purchases of almost 300 product categories across multiple retail formats. They quantify the impact on consumers’ total spending and examine the potential avenues for savings – shifting from one retail format to another; shifting from national brands to private label, regular price to promotional products, and higher to lower price tiers. They find a substantial negative effect on shopping frequency and purchase volume, and shifts away from grocery and to supercenter formats. Importantly, there is a greater shift from regular priced national brands towards promoted ones than towards private label, and, among national brand purchasers, bottom tier brands lose share, mid tier brands gain, and top tier brand share is relatively unaffected. The analysis also controls for general economic conditions and shows that gas prices have a much bigger impact on grocery shopping behavior than broad economic factors.

Keywords: grocery expenditure, gas price effect, macro-economic factors, retail format choice, promotions, private label.

Abstract: Retailers confront a seemingly impossible dual competitive challenge: Grow their top line while also preserving their bottom line. Innovations in pricing and promotion provide considerable opportunities to target customers effectively both offline and online. Retailers also have gained enhanced abilities to measure and improve the effectiveness of their promotions. This article therefore attempts to synthesize recent price and promotional findings as they pertain to effective promotion targeting, as well their implications with regard to new promotion processes and new technologies. This synthesis of existing findings also suggests avenues for further research.

Keywords: Promotion; Value; Retail strategy; Targeting; Retail technology

Abstract: In recent years, the cruise line industry has become an exciting growth category in the leisure travel market. Like airlines and hotels, it reports all characteristics of revenue management. Although revenue management has attracted widespread research interest in airline and hotel contexts, studies of Cruise Line Revenue Management (CLRM) are very limited. Using data from a major North American cruise company, we apply a variety of (24) forecasting methods, which are divided into three categories (non-pickup methods, classical pickup methods and advanced pickup methods), to generate forecasts of final bookings for the cruises that have not yet departed at a particular reading point. We use a two-stage framework to test alternative forecasting methods and compare their performance. We found the performance of multiplicative methods to be significantly worse. Among the additive methods, we find that classical methods perform the best, followed by advanced pickup and non-pickup methods. All classical pickup methods with the exception of exponential smoothing with trend perform fairly well. Among advanced pickup methods, ARIMA, linear regression and moving average produce the most accurate forecasts. Within non-pickup methods, moving average is the most effective method.

Keywords: Cruise Lines, Forecasting, Revenue Management

Abstract: Past research has found evidence of the existence of a significant digital divide among various socio-economic segments in terms of Internet access and usage. In this research, we use two annual (2002 and 2008) cohorts of demographically representative national random samples to investigate the relative levels of digital divide along the typical socio-economic fault lines. We find from our statistical analyses that not only does a deep digital divide still persist along key dimensions (like education) of the socio-economic fault lines, it has in fact widened along several key dimensions (like income and urban-rural divide).

Keywords: Internet; Digital Divide; Public Policy Issues, Logistic Regression.

Abstract: Extreme cherry pickers are customers who seek price deals and excessively avail themselves of deep discount offers, which generates negative profits for retailers. This study uses market transaction and primary consumer survey data to provide insights into the determinants, prevalence, and profit impacts of such behavior in the frequently purchased goods market. We find that the extreme cherry picking segment is small (about 2% of all shoppers), but its relative value varies across stores, and consumers manifest this behavior only in secondary stores. An inverse U-shaped relationship marks consumers’ opportunity costs for cross-store price search and likelihood of extreme cherry picking behavior. Finally, we also find that a loss leader promotional strategy adds to retailers’ bottom lines, despite the pure loss generated by extreme cherry pickers.

Keywords: Price Search, Loss Leader Promotions, Profit Impact, Shopping Trip Incidence Models

Abstract: Standardizing performance expectations across different outlets within a chain, differing in its individual features, its consumers, and the nature of competition it faces, can be an onerous task. We develop an integrated, non-linear, block group level market share model of store expectations that draws upon the existing trade area as well as store performance literatures. By incorporating and normalizing a large number of external and internal factors impacting performance, we are able to offer a means for the retailer to determine equitable standards. The model is estimated using a variation of the Maximum Likelihood Estimation, on a data set fashioned from several sources and aggregated at the block group and store levels. Finally, we propose a set of indices that allows us to evaluate relative performances of stores and regions given the competitive environments they face. We find that a block group level model offers a better fit as well as significantly richer implications than a traditional store level model. Results show that a significant number of stores operate well below their expected levels, an insight not obvious from the raw numbers used to report store statistics to upper management.

Keywords: Retailing, Store Performance, Benchmarking, Econometric Models

Abstract: Communication and promotion decisions are a fundamental part of retailer customer experience management strategy. In this review paper, we address two key questions from a retailer’s perspective: (1) what have we learned from prior research about promotion, advertising, and other forms of communication and (2) what major issues should future research in this area address. In addressing these questions, we propose and follow a framework that captures the interrelationships among manufacturer and retailer communication and promotion decisions and retailer performance. We examine these questions under four major topics: determination and allocation of promotion budget, trade promotions, consumer promotions and communication and promotion through the new media. Our review offers several useful insights and identifies many fruitful topics and questions for future research.

Keywords: Communication; Promotion; Advertising; New media: Resource allocation; Trade promotion; Consumer promotion; Accounting; Legal issues.

Abstract: One of the major problems faced by the management at supermarkets is the determination of a fair and equitable assessment of individual store performance keeping in mind the variation in store features, competitive environment, and socio-demographic characteristics of the consumers facing each location. Mainstream literature has thus far tried to define "trading areas" with finite borders around supermarkets to identify their customer base. However, in a densely populated highly developed urban environment, such trading areas have very high overlaps (90-95%) between stores, rendering the use of finite border models not only ineffective, but incorrect to use.

In this paper, we formulate and estimate four different models based on various assumptions such that in all models, market force of a store is conceptualized as a function of the internal and external features of the store. Four different models are estimated using a Multistart Newton-gradient method and Simple Genetic Algorithm with Elitist Strategy. We tested our models using scanner data of a 160 store supermarket chain located in the Northeast region of the USA, facing 1075 major competitors in 9 chains and covering approximately 6000 customer buying districts as designated by the Census Bureau. We find that out of the four models estimated, the sales based model gives the best fit. We achieve about 77% prediction accuracy of sales. We examine the residuals, then, as mainly due to fluctuations in store management quality. The resulting approach enables management to estimate expected sales for each supermarket in each buying district and compare it with their real performance. This way both supermarkets and buying districts can be evaluated. Moreover, it is also possible to estimate the intensity of competition in a given location and predict sales of a planned store with given features, thus providing input for a location planning model.

Keywords: Retail store performance, Estimating trade areas, Competition, Market Force.

Abstract: Two powerful, highly effective strategic tools that retailers possess involve pricing and store format decisions. From the several strategic choices available for each decision, a retailer can choose any combination. We focus on two gaps in the literature. First, both decisions are specific to the consumers to whom the stores cater and the environments within which they operate, yet little academic research studies them jointly. Thus, it is important to determine the joint effects of considering pricing and format decisions in a single framework. Second, do retailers, privy to findings from rich prior literature pertaining to consumer store choices related to their pricing and format preferences, actually take such information into account when making strategic choices? In this descriptive rather than prescriptive study, we determine whether a retailer that makes an initial choice about which policy to implement complies with existing understanding about consumer preferences. Using a unique data set that covers all grocery retailers in three states, we apply a multinomial logit model to study the determinants of price, format, and combination strategies for retailers. Although some combinations are more similar than others, a consideration of the pricing or format strategy in isolation fails to depict a complete picture, and the strategic implications change significantly when we study price and format strategies in combination.

Keywords: Retail strategy choice; Pricing and format strategy; EDLP; HiLo; Supermarket; Supercenter

Abstract: Price promotions are pervasive in grocery markets. A household can respond to price promotions by effective cherry picking through (1) spatial price search across stores and (2) temporal price search across time. But extant research has only analyzed these two dimensions of price search separately; therefore they under-estimate both the consumer response to price promotions and the impact of promotions on retail profit. In this paper, the authors introduce an integrated analysis of spatial and temporal price search. They seek answers to three questions: First, what are the predictors of household decisions to perform either spatial or temporal price search, both or neither? Second, how effective are the temporal, spatial and spatio-temporal price search strategies in obtaining lower prices? Finally, what is the impact of alternative price search strategies on retailer profit? They use a unique data collection approach that combines household surveys with observed purchase data to address these questions. Their key results are: Geography (the spatial configuration of store and household locations) and opportunity costs are useful predictors of a household’s price search pattern. Households that claim to search spatio-temporally avail about ¾ of the available savings on average; even those that claim not to systematically search on either dimension avail about ½ of the available savings. Households that search only temporally save about the same as ones that search only spatially. The negative effect of cherry picking on retailer profits is not as high as is generally believed.

Keywords: Consumer Search, Retailing, Price Promotions, Cherry picking

Abstract: In the world of e-commerce, most price comparison websites such as pricegrabber.com, cnet.com also provide information regarding store ratings to their customers. These e-ratings are obtained from past customers and are a credible source of information for current customers in the pre-purchase phase. Using data collected from 441 online retailers in three different product categories (DVDs & Videos and Books & Magazines) from BizRate.com, an online price comparison website, and Alexa.com, we use dominance analysis technique to compare the relative importance of different predictor variables. We find a similar pattern of importance rankings across all the three categories. We find that positive word of mouth has the maximum impact on repurchase intention in all the cases. This is followed by on-time delivery, order tracking etc.

Keywords: E-commerce, Online Ratings, Word of Mouth