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The Marketing Operations Interface in Consumer Retail: Theory and Practical Approach

Wei Ke, 2009
Faculty Advisor: Garrett van Ryzin

Abstract

This dissertation examines four consumer retail problems at the marketing operations interface. Interdisciplinary research between marketing science and operations research has gained tractionin recent years. Operations research models can help fine-tune the managerial insights that arise from consumer behavioral research; the operations research field in turn makes new inroads as models begin to account for consumer needs, preferences and attitudes.

A variety of modeling techniques, including both theoretical models and empirical implementations, are used in the context of each unique problem. Of the four topics studied in this thesis, the first two are more theoretical in nature, while the latter two are based on applied work.

The first topic investigates the incentives for coordinating product positioning and pricing of horizontally differentiated products in the context of a vertical trading partnership between a retailer and multiple suppliers. We also discuss several benchmark systems and the implications on channel efficiency.

The second topic considers an extension on the work by ?, who formulated a dynamic pricing problem of a monopolist firm facing product demand that was sensitive to a consumer's memory and the firm's pricing history. Our extension separates the effect of price communications from price changes, and analyzes the trade-offs that result from this separation.

The third topic examines the impact of physical locations on the sales of a product assortment, as part of an applied research project. We study the methods to optimize the location assignment of that product assortment and to forecast the impact of a location change.

The last topic is an applied case study that focuses on the design and deployment of a causal forecasting model at a customer service network. We are interested in verifying the effectiveness of discrete choice models on forecasting real-world demand at a relatively granular level.

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