Mohammad G. Nejad

Alternative Supply Chain Production-Sales Policies for New Product Diffusion: An Agent-Based Modeling and Simulation Approach

Applying agent-based modeling and simulation (ABMS) methodology, this paper analyzes the impact of alternative production–sales policies on the diffusion of a new generic product and the generated NPV of profit. The key features of the ABMS model, that captures the marketplace as a complex adaptive system, are: (i) supply chain capacity is constrained; (ii) consumers’ new product adoption decisions are influenced by marketing activities as well as positive and negative word-of-mouth (WOM) between consumers; (iii) interactions among consumers taking place in the context of their social network are captured at the individual level; and (iv) the new product adoption process is adaptive. Conducting over 1 million simulation experiments, we determined the “best” production–sales policies under various parameter combinations based on the NPV of profit generated over the diffusion process. The key findings are as follows: (1) on average, the build-up policy with delayed marketing is the preferred policy in the case of only positive WOM as well as the case of positive and negative WOM. This policy provides the highest expected NPV of profit on average and it also performs very smoothly with respect to changes in build-up periods. (2) It is critical to consider the significant impact of negative word-of-mouth in choosing production–sales policies. Neglecting the effect of negative word-of-mouth can lead to poor policy recommendations, incorrect conclusions concerning the impact of operational parameters on the policy choice, and suboptimal choice of build-up periods.

Innovation in hospitality and tourism industries

Over the past few decades, services have played a critical role in the economies of most industrialized nations (Song et al., 2009). Innovative technologies and business models have transformed the service environment (Sorescu et al., 2011). Service innovation “introduces something new into the way of life, organization, timing and placement of what can generally be described as the individual and collective processes that relate to consumers” (Barcet, 2010, p. 51). Research in service innovation has evolved from a generic perspective to a demarcation perspective, portraying it as something that should be differentiated from product innovation and, finally, shifting into a synthesis perspective (Carlborg et al., 2014). The synthesis perspective emphasizes the necessity of an integrated approach to innovation that considers both technological and non-technological aspects.

Optimal Pricing for the Growth of Innovations with Direct Network Externalities: An Agent-Based Approach

Purpose – This study explores optimal pricing strategies for innovations with direct network externalities. The utility of these innovations increases with the number of adopters and thus the innovation takeoff requires a certain number of adopters. Design/methodology/approach – Agent-based Modeling and Simulation. Findings – The relationship between price and NPV of revenue resembles an asymmetric inverse U-shape. Low-pricing strategy outperforms high-pricing, while a moderate pricing strategy outperforms both low- and high-pricing strategies. Moreover, heterogeneity of consumer price sensitivity positively affects NPV of sales. Practical implications – Pricing durable new products with network externalities are more challenging than other types of innovations. The price pattern of most new durable products are out of the control of firms and historical data indicates that the price of such innovations drops over time which further highlights the importance of their introductory pricing. The results indicate that firms can maximize their NPV by adopting a moderate pricing strategy. Moreover, firms must consider heterogeneity of consumer price sensitivity along with the market price elasticity when making pricing decisions. Detailed strategic implications and recommendations are discussed. Originality/value – Several recent studies have called for studying pricing strategies for new products with network externalities. The study findings challenge the common wisdom that a penetration pricing strategy is an optimal approach for durable products with network externalities. Moreover, while other studies have highlighted the importance of market price elasticity, extensive simulation experiments conducted in this study shows that heterogeneity of consumer price sensitivity is an important factor that must be considered. Finally, the study presents an agent-based modeling approach for exploring optimal pricing innovations with network externalities.

Alternative Measures of Price Perceptions: Implications for Service Evaluation Models

This study investigates the role of perceived price and the effects of alternative measures of perceived price (noncomparative or comparative) on the strengths of the relationships in service evaluation models. An extended service evaluation model is tested using alternative price measures with data from a sample of customers of a national retailer of automotive parts and services. The findings suggest that the way perceived price is measured affects the relationships in the model. Implications of the results are discussed and future research avenues are offered.

Is share of wallet exclusively about making customers happy or having more customers? Exploring the relationship between satisfaction and double jeopardy

Purpose – The satisfaction and loyalty research argues that customer satisfaction is an antecedent to share of wallet (SOW). The double jeopardy view, however, argues that satisfaction and SOW levels are driven exclusively by penetration levels. Customer satisfaction and penetration, however, are not always positively related. The purpose of this paper is to explore the relevance and validity of these two divergent perspectives to creating growth in customer share of spending. Design/methodology/approach – The authors examine a series of models evaluating the impact of both the relative penetration of a brand, and the satisfaction ratings of its customers on SOW using data covering 11 industry sectors, 188 brands, and 4,263 customers. Findings – The authors find that part of the problem in reconciling these two views has been in how satisfaction is measured and analyzed. When using absolute satisfaction ratings of the firm/brand, the explanatory power of satisfaction on SOW is very weak at both the indivi...

Research on Financial Services Innovations: A Quantitative Review and Future Research Directions

Purpose: This study presents a systematic overview of the current state of research on innovations in financial services and identifies the areas that have received less attention which offer opportunities for future research.Design/methodology/approach: An extensive search identified 121 research papers that have studied innovations in financial services from January 1990 to March 2015. A thorough content analysis objectively organized and coded the studies based on various aspects including publication year, focus of study, methodology, unit of analysis, sample, data analysis method, and geographical region. The study adopts a quantitative approach by focusing on the number of articles published as the variable of interest, and thus identifies the areas that have received less attention in a quantitative way.Findings: The findings synthesize the research papers with regards to each of the aforementioned aspects and offer researchers directions for future research. While research has been more or less diverse, the results demonstrate that studies on the consumer side have primarily examined adoption of Internet or mobile banking, suggesting that future research should focus on other aspects. Future research can focus on the spatial and temporal data available from mobile banking, how financial innovations have led or can lead to leapfrogging advances in developing countries, and how they can contribute to consumer well-being. On the firm side, more research is needed to explore the performance of financial institutions and innovations, financial services design and development, and firms’ strategies regarding financial innovations.Research limitations/implications: The sample size of 121 articles is an adequate sample size for the purpose of the study and it is in line with similar studies on innovations in other areas. However, future research can expand the study to review the academic journals that were not included. It can also review and synthesize the qualitative aspects of studies and a meta-analysis of the identified relationships.Originality/value: The study is the first to present a holistic overview of the current state of research on innovations in financial services. The findings offer clear directions to researchers for future research and hence can be used to promote research in these areas.

The impact of cognitive style, entrepreneurial attitudes and gender on competitive price responses

Purpose While existing research has established various methods for pricing, the impact of a manager’s individual psychological profile on his/her price setting behavior is relatively unexamined. This is especially critical in the context of pricing decisions implemented in response to competitive forces. This paper aims to explore how a manager’s price responses to price cuts by a competitor are affected by his/her cognitive style, gender and entrepreneurial attitudes. Design/methodology/approach In the first study, a simulation-based pricing environment is used in a lab setting to capture the dynamics of pricing decisions made in response to competitive price cuts. Participants’ price responses are captured in the form of the magnitude of price change implemented in a simulated environment in response to a competitor’s price reduction. The second study extends the scope of inquiry by using a national sample of business professionals and replicates and reinforces the findings of the first study by capturing participants’ attitudinal response on the decision to reduce prices in reaction to competitive price reductions. Findings The results of both studies indicate significant effects for cognitive style, gender and entrepreneurial attitudes. Individuals with stronger entrepreneurial attitudes and analytical cognitive styles, and females are less likely to engage in reactive price reductions. Research limitations/implications The findings of this study indicate that managers’ propensity to engage in price changes in reaction to competitors can be linked to their psychological profile and gender. Practical implications Given the existence of the relationship between price reactions of managers and their cognitive style and entrepreneurial attitudes, the training and development of pricing professionals may need to take these individual-level factors into account. Originality/value This is the first study that has linked managers’ propensity to engage in price changes in reaction to competitors to their gender and psychological profile.