讲座题目:The Bright and Dark Sides of Customer Switching

题目:The Bright and Dark Sides of CustomerSwitching


时间: 2018920日星期四下午1500-17:00



We investigate price and stock competition between two retailersthat sell to an uncertain market. The market size is more likely to be large(small, resp) in optimistic (pessimistic, resp) market conditions. Theretailers ex-ante set prices and prepare stocks before knowing the actualmarket size. Ex-post realization of market size, each customer purchases from aretailer to maximize his utility that depends on price and feature preference.A retailer satisfies its local demand up to availability. Upon stockout, anunsatisfied customer switches to the other retailer provided he perceives anon-negative utility. We show that the retailers, when differentiating in priceand stock level, use them as strategic substitutes in the absence of customerswitching but strategic complements otherwise. Product value and marketcondition are crucial to how retailers tailor operation policies to fit theoccurrence of customer switching. At a high product value, it lures them todifferentiate in optimistic market conditions, but forces them to price andstock low in pessimistic ones. A decrease in product value weakens theretailers’ incentive for differentiation and makes them always converge inoperation policies. This however disables them to use differential tools, whichthey could be able to do when customer switching is absent, in pessimistic marketconditions. A sufficiently low product value can completely deprive retailersof the incentive to incubate switchover demand, to make customer switchinginconsequential on their operation. All this leads to rather mixed implicationsof customer switching for the retailers’ profit performance.

Joint work with D. Cai


Li Jiang obtained his PhD in Operations and Management Science from the RossSchool of Business in the University of Michigan. He joined the Department ofLogistics and Maritime Studies in the Hong Kong Polytechnic University in 2007,and is now a Full Professor. His current research interests include parametricand non-parametric estimation, complex channel design and analysis, informationasymmetry and behavioral operations. He has published in Management Science,Manufacturing & Service Operations Management, Production and OperationsManagement and Naval Research Logistics. He reviews manuscripts for thesejournals and serves on editorial boards.