Kirthi Kalyanam

A decision support system for vendor managed inventory

Abstract Recently, vendors and retailers have begun to forge cooperative agreements to manage inventory, which requires sharing demand information and setting mutually agreed upon performance targets for the supply chain. This paper describes the market forecasting and inventory management components of a Vendor Managed Inventory (VMI) decision support system and how this system was implemented by a major apparel manufacturer and over 30 of its retail partners. The DSS also helped the vendor and retailers arrive at jointly agreed upon customer service level and inventory turnover targets. As a result of implementing this VMI system, customer service levels improved dramatically, often coupled with a significant improvement in inventory turnover. The VMI performance results relative to the existing system and related insights for supply chain coordination are discussed.

The E-Marketing Mix: A Contribution of the E-Tailing Wars

In the context of the wars between the upstart Internet retailers and the existing bricks-and-mortar retailers, many e-marketing techniques were invented. This article develops a single unifying and theoretically based taxonomy for e-marketing techniques: the e-marketing mix. Drawing on the paradigms of exchange, relationships, and digital interactions in networks, 11 e-marketing functions are identified that form the elements of the e-marketing mix. Nine of the 11 e-marketing functions are considered basic, while 7 functions moderate the effects of others and are termedoverlapping. The 11 e-marketing functions provide a categorization of the e-marketing techniques. Compared to the conventional marketing mix, the e-marketing mix has more overlapping elements and directly represents personalization, an aspect of segmentation, as a basic function. The existence of multiple elements that are basic and overlapping in the e-marketing mix indicates that integration across elements should be more commonplace compared to the traditional marketing mix.

Future Store Technologies and Their Impact on Grocery Retailing

Around 2002, as a participant of MIT’s Auto-ID center, the METRO Group saw the need to test, prove, observe and experience the acceptance of RFID and other new technologies in a real-life environment. The objective was to find solutions entailing real advantages for both the retail industry and the consumers. In the short run, the focus was on technologies that can increase the effectiveness of logistic processes and make shopping easier and more convenient. Longer run objectives include setting standards for retailing that can scale on an international basis.

Return on Reputation in Online Auction Markets

This research develops an assurances framework to assess the effect of a seller’s feedback “reputation” on the closing price of an online auction. The framework treats bidders as if they were ‘intuitive statisticians’ in their use of reputation cues. The framework leads to hypotheses about how information-based assurances (particularly feedback scores and the seller’s provision of information about the product) may be used by buyers to reduce their trading risks. The hypotheses are tested using data collected from the eBay web site on auctions of Palm Pilot personal digital assistants. It is found that the higher the seller’s reputation the higher is the average closing price of the auction, which constitutes a return on reputation (ROR). Thus the reputation infrastructure rewards good behavior with positive economic outcomes and helps to sustain a virtuous cycle in the online ecosystem. More specifically, it is found that: (a) negative comments are weighted more heavily than positive ones (b) negative feedback is subject to diminishing returns (c) the assurance offered by reputation is more salient among risk-averse buyers and (d) a high level of information about the merchandise also provides another form of assurance. However, when faced with a high level of information, risk-averse buyers seem to rely less on the sellers reputation score for assurance (a three way negative interaction between risk aversion, reputation and high information). The economic impact of these findings is that the seller of a Palm Pilot who has a high reputation can expect to receive as much as 12.6% more for the item than if he had a low reputation score. Of course, eBay also participates in this upside through its commission structure as well as the wider impact that the feedback seems to have. It is argued that the market for assurances is a contributor to eBay’s success and is also essential to the optimal functioning of any online market.

From Volume to Value: Managing the Value-Added Resellers Channel at Cisco Systems

This article provides an in-depth look at a value-based channel management model at Cisco Systems for managing the Value-Add Reseller (VAR) channel. In March 2001, Cisco initiated a change from a volume-based channel management model, which had been driving out partner value, to a value-based model that tied channel rewards to specific channel value-add activities. Critical components of this new model include: identifying opportunities for channel value-add; architecting channel programs to enable channel value-add; tying financial rewards to value-add channel activities including a “holdback system;” and exercising significant discipline to manage field pressures for volume-based rewards and diluting certification requirements. It demonstrates that VARs can serve as a significant sales channel, profitably selling complex solutions to satisfied customers under a value added channel management framework. They can also uncover demand opportunities that are incremental to the pull marketing of even a strong brand like Cisco. However, companies need to exercise significant discipline to avoid mixing volume-based rewards with a value-based framework.

A cost-plus trap: Pricing heuristics and demand identification

Cost plus pricing is a common pricing heuristic. We investigate whether a firm, following cost plus pricing in a simple environment, will eventually have enough information about demand conditions to switch to an optimization-based pricing approach. We find that with unsophisticated statistical approaches this is unlikely, and even with a Bayesian decision theoretic approach there can be what we call a “cost plus trap.”

Hewlett Packard Consumer Products Business Organization: Distribution through E*Commerce channels †

This article is not available electronically because the copyright is held by the President and Fellows of Harvard College and permission was only granted for print publication. To order copies or request permission to reproduce materials go to http://harvardbusiness.org . The Publisher regrets any inconvenience this may cause.

Article not available electronically: Hewlett Packard consumer products business organization: distribution through e*commerce channels, Kirthi Kalyanam, Shelby McIntyre

This article is not available electronically because the copyright is held by the President and Fellows of Harvard College and permission was only granted for print publication. To order copies or request permission to reproduce materials go to http://harvardbusiness.org . The Publisher regrets any inconvenience this may cause.

An Experimental Investigation of the Effects of Retargeted Advertising: The Role of Frequency and Timing

In collaboration with an online seller of home-improvement products, the authors conduct a large-scale randomized field experiment to study the effects of retargeted advertising, a form of internet...

Article not available electronically

This article is not available electronically because the copyright is held by the President and Fellows of Harvard College and permission was only granted for print publication. To order copies or request permission to reproduce materials go to http://harvardbusiness.org . The Publisher regrets any inconvenience this may cause.