Consumer Behavior

The authors describe a model of the effects of advertised and observed quality on consumer expectations about new product quality. They test the model using data from two computer-controlled shopping experiments. In both studies, quadratic and gamma specifications for the effect of advertising claim discrepancy on expectation change fit better than a linear model. Furthermore, the adaptive expectations framework describes the updating of consumer expectations when the consumer observes the quality of the new product.

In most dynamic planning problems, one observes that an optimal decision at any given stage depends on limited information, i.e. information pertaining to a limited set of adjacent or nearby stages. This holds in particular for planning problems over time, where an optimal decision in a given period depends on information related to a limited future time horizon, a so-called forecast horizon, only. In this paper we identify a general class of dynamic programs in which an efficient forward algorithm can be designed to solve the problem and to identify minimal forecast horizons.

We model the effects of variety-seeking and marketing-mix variables on consumers' purchases of coffee using a nested logit model. We premise that on any given purchase occasion, the utilities of brands other than the one purchased on the previous occasion may be correlated due to the consumer's tendency to seek variety or to avoid variety. This results in a two-level hierarchical model where choice on any purchase occasion is conditioned on the brand purchased on the immediately preceding occasion.

We consider a production/distribution system represented by a general directed acyclic network. Each node is associated with a specific "product" at a given location and/or production stage. An arc (i, j) indicates that item i is used to "produce" item j. External demands may occur at any of the network's nodes. These demands occur continuously at item-specific constant rates. Components may be assembled in any given proportions. The cost structure consists of inventory carrying, viable, and fixed production/distribution costs.

This paper addresses a class of single-machine scheduling problems with a common due-date for all jobs, and general earliness and tardiness costs. We show that a class of simple, polynomial, "greedy-type" heuristics can be used to generate close-to-optimal schedules. An extensive numerical study exhibits small optimality gaps. For convex cost structures, we establish that the worst-case optimality gap is bounded by e−i ≈ 0.36, if the due-date is non-restrictive.

Polling system models are extensively used to model a large variety of computer and communication networks as well as production and service systems in which multiple customer classes or a number of distinct items compete for the capacity of a common server or production facility. In this paper we describe an efficient approximation method for the steady state distributions of the queue sizes and waiting times. This method is highly accurate as demonstrated by an extensive numerical study.

The authors examine how new brand entries affect consumers' consideration sets. A within-subject longitudinal experiment examines several entry positions into existing markets. The results suggest that new brand entries produce changes in consideration sets toward dominating, compromise, and assimilated brands, away from extreme brands in two-brand markets, and toward dominating and away from extreme brands in eight-brand markets. These results are confirmed by a second experiment that utilizes a between-subject design and markets with six existing brands.

This study examines how advertising budget setting, framed as a prisoner's dilemma, is affected by information on the competitive situation and characteristics of the decision maker. Hypotheses are tested using experiments in which subjects set advertising budgets. Results indicate that subjects were generally competitive, but also based their strategy selections on what they expected their opponents to do, what their opponents did last time, whether the competitive relationship was expected to continue, market shares, and whether the subject's profit objectives were short- or long-term.

The nature of competitive equilibrium is investigated for brands competing in a multi-attribute product space when consumer preferences for product attributes follow nonuniform distributions. Subgame-perfect equilibria are established in a 2-stage game, where firms choose positions in the first stage and prices in the 2nd stage. Two types of entry scenarios are investigated. In the first, the number of brands is given exogenously, and all of them choose positions simultaneously.