Mobile application service networks: Apple’s App Store

In fast-moving and complex App Store, there is a need for exploring the content of mobile application services themselves. Thus, this research empirically analyzes the relationships among mobile application services to identify their structures and positions through a text-mining-based network analysis. Associations among categories and applications are visualized as macro-level category network and micro-level app network; network indexes gauge the structural properties and positional characteristics of each network. Mobile service categories are compared according to their values and grouped according to network properties using cluster analysis, offering implications for the sectoral characteristics of mobile services in App Store.     

Key success factors for mobile app platform activation

This study explores the key activation factors of the mobile application development platform through a comparative analysis of Apple App Store and Samsung Apps platforms based on the information and communications technologies intensive service innovations (IISIⁿ) model from the developer’s perspective. We conducted intensive interviews of 14 mobile app developers who had development experiences with both Apple App Store and Samsung Apps. The study results indicate that the most important app development platform activation factors from the developer’s perspective are: (1) core components of the platform and technical support; (2) policy assistance for developer work activities; and (3) assurance of adequate financial returns to developers. This study is based on grounded theory and uses the IISIⁿ model to determine the success factor of mobile app platform activation. The results of this study make contributions to both theoretical and practical aspects regarding strategies and operations of mobile app development platforms.     

Signaling quality with new product preannouncements: Vaporware and the role of reference quality

This research develops a signaling game that captures the essential dynamics of new product preannouncements (preannouncement/launch/market feedback). New product preannouncements are preannouncing firms' formal efforts to inform their competitors and customers about the future availability, superior quality and introductory price of their upcoming new products. In a market, two firms compete (entrant preannounces and incumbent responds) across two periods. The entrant has private information about the true quality of a new product (the incumbent and customers do not know it), and this informational asymmetry provides the entrant with a preannouncement dilemma. Should the entrant preannounce and, if the entrant does, should the entrant tell the truth about quality? Preannouncements often get customers who might buy now from a competitor to wait for a higher quality to be available. Therefore, the entrant may have an incentive to bluff the quality of a new product in order to enhance the likelihood of customers' waiting. However, because the quality exaggeration is also likely to increase customers' quality expectations, the entrant may suffer a significant sales penalty if the entrant does not deliver the promised quality. Through the signaling game, this paper derives conditions under which such a bluff does/does not put the preannouncing firm at risk (i.e., this paper derives the separating/pooling equilibria that are the focus of signaling games).     

The Impact of Mobile App Adoption on Cross-buying: The Moderating Roles of Product Category Characteristics and Adoption Timing

With more and more companies introducing mobile apps and consumers using them during the purchase journey, it is increasingly important to understand the consequences of app adoption on behavioral outcomes. This paper investigates the impact of app adoption on the number of additional products purchased by customers (i.e., cross-buying) and how this effect varies across different product categories and different customers. We focus on two key product category characteristics (utilitarian vs. hedonic nature and perceived risk) and on adopters who vary in their adoption timings (early vs. late adopters). Using data from an online retailer and a combination of propensity score weighting with difference-in-differences and Heckman correction estimation techniques, the results show that app adoption has a positive effect on cross-buying overall, but the effect varies greatly across products and consumers. App adoption promotes additional product purchases for hedonic products but leads to less cross-buying for utilitarian products. In addition, early adopters purchase a higher number of additional product categories than late adopters, with this difference decreasing over time and for new consumers compared to existing customers. These results offer novel insights into the behavioral consequences of app adoption and provide managers with useful recommendations for improving the effectiveness of their mobile app investments.     

Price and quality decisions in a vertically-differentiated supply chain with an “Online-to-Store” channel

Because of the prevalence of “Online-to-Store (OS)” channel, customers can purchase differentiated products online and pick up in-store. We develop a Stackelberg game-theoretic model to study the impact of an OS channel on quality levels, demands, prices, and profits of a manufacturer and a retailer in a supply chain. We assume that the retailer acts as a Stackelberg leader, and the manufacturer acts as a Stackelberg follower. The manufacturer produces and sells two products with vertically-differentiated quality levels to the retailer who in turn sells the products to customers through a Store channel, an Online channel, or an OS channel. The retailer incurs a handing cost if the OS channel is available, and consumers bear a shipping cost and a transaction cost when the products are purchased from the Online and Store channels, respectively. We find that the manufacturer should reduce both products’ quality levels and wholesale prices, whereas the retailer can increase the selling prices for a relatively small shipping cost and a not too small handling cost. When the products are available both online and in-store, however, the quality levels, wholesale prices and selling prices might increase for a small shipping cost and a not too small handling cost. Compared to the case in which both products are available online only with the OS channel, adding the Store channel is always beneficial for both parties. The intuition behind these results hinges on the trade-off between the handling cost and the increased market demand for the retailer. Moreover, the quality levels, the wholesale prices of both products, and the selling price of the low-quality product would decrease, while the selling price of the high-quality product increases for a sufficiently low transaction cost and a not too small shipping cost.     

Tie-in contracts with downstream competition

A tie-in contract has frequently come under scrutiny for its role as an exclusionary device. A firm that is a monopolist in a primary market can utilize such contracts to exclude a more efficient rival in a secondary market. When the firms sell through competing retailers, the leveraging firm may offer tie-in contracts to the retailers inducing them to purchase both primary and secondary products entirely from it such that the rival is excluded. We examine whether such tie-in contracts are profitable for an incumbent firm under different conditions of (i) the ability to commit to prices by the upstream firms and (ii) downstream competition among the retailers. We show that when retailers compete in prices, then regardless of whether the entrant is able to commit to its own prices, an exclusionary tie-in strategy is profitable (not profitable) for the incumbent when it is able (unable) to commit to prices. However, when retailers compete in quantities, the entrant’s commitment ability does matter. Specifically, an exclusionary tie-in strategy (i) may be unprofitable for an incumbent when both upstream firms are able to commit to their prices, depending on the degree of cost advantage of the entrant; (ii) is always profitable when it alone can commit to its price; and (iii) is unprofitable when both upstream firms cannot commit to their prices. Our results extend to situations where the products are complementary or substitutes and where the retailers may be asymmetric in nature.     

Foreign investment in the retail sector of the People's Republic of China

For many years, manufacturing was the hottest sector in the Chinese market. But when free market retailing became legal again in 1978, China's retail sector took off. Joint ventures between large department stores, such as Yaohan Department Store of Japan and the Chinese state-run Shanghai No. 1 Department Store, are growing to take advantage of China's potential 1 billion new customers. Davies paints a clear picture of the industry and candidly discusses the problems surrounding this new market: over-estimates of consumer demand, retail price inflation, currency flow problems, and increased smuggling and counterfeiting. Yet he is optimistic that retailing can only grow when Hong Kong becomes part of China in 1997.     

Music as a Service as an Alternative to Music Piracy?

Despite increasing acceptance of digital channels, total sales in the music business decreased by 31 % from 2004 to 2010. Music piracy is still considered one of the main causes for this. However, several studies found no effects or even positive effects of illegal downloading on record sales. In the past, piracy has been counteracted especially by prosecution and legal offers. Music as a Service (MaaS) represents a new, differing distribution approach in digital music. In contrast to the well-known music platforms for so-called à-la-carte downloads, such as the iTunes Store, MaaS possesses two important characteristics: transmission (streaming instead of downloading) and pricing model (flat rate instead of pay-per-download). Therefore, the consumption of music by means of purchasing and downloading is replaced by a monthly payment service (paid MaaS) and an ad-supported (free MaaS) service. First user surveys suggest that many music pirates are making use of these offers. To find out if MaaS is an attractive distribution channel for music pirates, we developed a model to explain the intention to use MaaS based on the Theory of Planned Behavior. To empirically test this model, we surveyed 132 music pirates. Among others, the outcome shows that the intention to use free MaaS is mainly affected by the attitude towards MaaS, while using paid MaaS is predominantly a result of the influence of users’ closest peers. The attitude towards MaaS is positively influenced by the desire to receive music recommendations, the payment type (in the form of a flat rate model), and the relative advantage of MaaS compared to illegal choices.     

Local competition, entry, and agglomeration

This paper analyzes competition between two spatially differentiated multi-product retailers who encounter entry from a low-cost discounter. We assess how entry affects the pricing of the incumbent stores and the role played by the location of the entrant. Our primary objective is to identify how traditional retailers respond to new forms of low-cost retailing. Results show that post entry, the prices for some products are higher than the pre entry. However, which product prices increase depends on the incumbent’s location. Contrary to conventional wisdom, we find that the store closer to the entrant is better off compared to the incumbent located further away. We empirically demonstrate the main workings of our theory using sales data from several grocery stores that saw entry by discount stores in their trading areas.     

An Investigation of the Sources of Store-Based Retailers' Early Entrant Advantages: Market and Resource Factors

The focus in this study is to explore the sources of the potential early entrant advantages in retailing markets. Are the sources of retailers' early entrant advantages external market factors, internal resource factors, neither, or both of these two types of factors? The results show that for store-based consumer electronics retailers, early entrant advantages result from two factors: non-firm-specific factors unique to the retailing industry subfield of consumer electronics retailing and firm-specific operations capability factors. However, in this study, firm-specific advertising capability factors did not seem to make any significant contribution to early entrant advantages.     

产品空间结构与农产品比较优势动态——基于高维面板数据的分析与预测

本文从产品空间理论出发,以2000-2010年52国的65种细分农产品数据为样本,探讨了农产品空间的分布形式,建立高维面板数据模型检验了产品空间结构与比较优势变动的关系,并对中国农产品比较优势培育目标的选择进行了探讨。研究发现:农产品空间分布是不均匀的,不同品种间的距离有差异;产品密度高对农产品比较优势的变动具有正面影响。本文认为,对农产品比较优势变动进行干预和引导,必须遵循此规律,依据比较劣势产品密度的大小来依次选择合适目标,才能有效的在更多农产品上实现比较优势。     

Consumer perceptions of third party product quality ratings

Consumers increasingly rely on product quality information provided by third-party product ratings organizations. These organizations undertake the task of examining and testing competing products in the marketplace, establishing the level of quality associated with each product, and communicating this information to consumers. Despite the important role of product quality ratings in consumer decisions little research has been conducted to establish the factors which may influence consumer perceptions of these ratings. This paper examines the role of the information content provided by product quality ratings organizations on consumer perceptions. Furthermore, the influence of contextual variables, namely information cost, product category and advertising content, is examined. The results indicate that both content and context significantly influence consumer perceptions of source credibility and their intentions to use the product quality ratings in their purchase decisions.     

It's not only what they buy,it's also what they keep: Linking marketing instruments to product returns

Online retailers implement various marketing instruments to boost their sales. These marketing instruments can not only impact sales, but also product returns. However, when assessing the performance of marketing instruments, retailers often ignore potential return effects. Theoretically, marketing instruments could increase or decrease returns, depending on how they affect expected and experienced costs and benefits related to a product. In this paper, we empirically examine whether, and how a comprehensive set of marketing instruments (newsletters, catalogs, coupons, free shipping, paid search, affiliate advertising and image advertising) affects product returns. We use data from two major online retailers and show that return effects vary largely across marketing instruments. Surprisingly, none of the instruments reduces product returns. Newsletters, paid search, catalogs and free shipping increase returns substantially by up to 18%. For free shipping and catalogs, the return effects emerge prevalently for fashion categories, whereas online advertising and newsletters increase returns of both fashion and non-fashion products. These findings enhance our understanding of how firm-initiated marketing instruments affect returns and provide guidance for online retailers in multimedia environments.     

Product Differentiation,Industry Concentration and Market Share Turbulence

Building on the current theory of industrial concentration, we analyze the relation between market size and product differentiation, and show how product differentiation impacts market share turbulence. We first propose that in markets where vertical product differentiation dominates, firms will have an incentive to escalate investment in advertising and/or R&D as market size increases. Secondly, such (firm‐specific) investments will make competitive advantage more sustainable as the firm is less imitable. This will not be the case if the market is primarily characterized by homogeneous products or horizontal product differentiation. Our predictions are tested using an original EU dataset for 1987 and 1997. Our results strongly support our predictions – the degree of market share turbulence increases with market size. However, this relation is weakened by competitive investment in advertising and R&D.     

Stochastic service life cycle analysis using customer reviews

This study proposes a stochastic service life cycle analysis to gauge where a service is in its life cycle and to give forecasts about its future prospects. We employ customer review data to measure customer-oriented service maturity and use a hidden Markov model to estimate the probability of a service being at a certain stage of its life cycle. Based on this, we also develop three indicators to represent the future prospects of a service’s life cycle progression. The main advantages of the proposed approach lie in its ability to model different shapes of life cycles without any supplementary information and to examine a wide range of services at acceptable levels of time and cost. We believe our method will assist firms in building stage-customised post-launch service strategies. A case study of mobile game services in the Apple App Store is presented.     

Manipulation and Deception as Part of a Phishing Equilibrium

Free markets are products of peace and freedom, flourishing in stable times when people do not live in fear. But they also create an economic equilibrium that is highly suitable for enterprises that manipulate or distort our judgment on competitive markets. Unregulated free markets rarely reward the different kind of heroism, of those who restrain themselves from taking advantage of customers’ psychological or informational weaknesses. People frequently make decisions that are not in their best interest. Such bad decisions make it possible for them to be phished for phools. If we have some weakness or other—some way in which we can be phished for phools for more than the usual profit—in the phishing equilibrium, it will be taken up.     

Exploring the drivers of new product success for businesses in Asia: a meta-analysis

Even though a large amount of research has investigated how different factors impact new product performance in different contexts, little attention has been paid to exploring the drivers of new product success for businesses in Asia. This study therefore focuses on this issue by using a meta-analytic approach to aggregate the empirical findings of studies published before 2011. By controlling several contextual factors (product type, unit of analysis and time), the results from generalized least-squared analyses show that the predictor–performance relationships are stronger for Asian firms when the predictors are market orientation, marketing synergy, technological synergy, product advantage, product innovativeness, cross-functional integration, top management support, pre-development proficiency, technological proficiency, market potential and technological turbulence. In addition, the results also reveal that most of the performance effects of the predictors are different between low-technology and high-technology products.     

How incumbent firms foster consumer expectations, delay launch but still win the markets for next generation products

Consumers learn quality of many durable products through word-of-mouth information while firms launch new and improved products frequently in these markets. This paper examines firm incentives to invest in R&D to compete for patents in makets where consumers rely on word-of-mouth information and have expectations about the new products before launch. When its loss due to a possible entry is above a threshold, an incumbent has more incentives than a potential entrant to invest in R&D for patents. Moreover, if the current product is more profitable, its true quality is above consumer priors and the quality of the new product is below a threshold, it is optimal for the incumbent to launch the new product after a time lag. The later the optimal time of launch, the greater is the incumbent’s potential loss if entry occurs and greater its incentives is to invest in R&D versus that of the entrants. While potential entrants are generally thought to have more incentives to invest in a drastic innovation which results in a race to launch the new products, we show that the more drastic the innovation, the later the optimal time of launch and greater are the incumbent’s incentives to invest in R&D when the value added of the new product can be conveyed to all the consumers. Only when consumers are uncertain about the value added of the new product, the incumbent’s incentives are lower. We also demonstrate that by promoting consumer expectations about the new product before launch, an incumbent has more time to launch and higher probability of dominating its market.     

Entry deterrence/accommodation with imperfect strategic thinking capability

Both through empirical research and laboratory experiments it has been shown that managers are heterogeneous in strategic thinking-i.e., not all the managers can accurately conjecture their competitors’ behavior and actions. In this paper, we examine the entry deterrence/accommodation strategy of an incumbent firm facing a potential entrant that may behave less strategically than the incumbent in the way of conjecturing competitors’ actions and beliefs. We adapt the Cognitive Hierarchy model to capture this heterogeneity among the managers of the entrant firm and the incumbent firm. Surprisingly, we show that the incumbent can deter entry by investing in expanding the market size and the competition may increase the incumbent’s incentive to invest in market expansion. If entry does occur, the market expansion in our model also benefits entrant comparing to the case without market expansion. This feature of our result sets it apart from the standard result in the entry deterrence literature, which tends to suggest that incumbent has to either over-invest in actions harmful to entrant if entry occurs. In our model investing in expanding the market size makes the entrant to update its belief about the incumbent’s strategic thinking capability downward and thus, decreases the entrant’s expected profitability, which in turn deters entry. Our research has important implications especially for emerging markets given that the lack of management talent is a particularly severe problem among local firms in emerging markets and multinational companies pioneer in the emerging markets with great market expansion opportunities have to face the potential entry of local companies.     

Optimal variable sample size and sampling interval ‘mean squared error’ chart

The deployment of statistical process control in the service process is a prominent global phenomenon in recent years. In this paper, we proposed the optimal variable sample size and sampling interval (VSSI) mean square error (MSE) control chart to monitor the difference between the process mean and the target value and the process variation shifts, and its performance is measured by the average time to signal. From data analyses, we found the optimal VSSI MSE chart that performs better than the specific VSSI and the optimal variable sampling interval and the fixed parameters MSE charts. An example was given to illustrate this new proposed approach.