• Mobile Marketing Presentation at Wharton Conference on Retail Disruption

    Was the lead academic speaker at the Wharton School at the University of Pennsylvania conference “Disruption in Retail,” attended by CXOs and key academics. The conference brought industry and academic thought leaders together to discuss disruptive developments that are impacting the retail industry.

    https://www.facebook.com/maysbusiness/photos/a.10150414087201215.411819.8461306214/10154503291961215/?type=3&theater

  • Moblie Shopper Marketing: Key Issues, Current Insights, and Future Research Avenues

    Shankar et al.

    by Venkatesh Shankar, Mirella Kleijnen, Suresh Ramanathan, Ross Rizley, Steve Holland, and Shawn Morrissey

    This article is forthcoming in Journal of Interactive Marketing

    The intersection of mobile marketing and shopper marketing, known as mobile shopper marketing, is a rapidly evolving area. We formally define mobile shopper marketing as the planning and execution of all mobile-based marketing activities that influence a shopper along and beyond the path-to-purchase: from the initial shopping trigger, to the purchase, consumption, repurchase, and recommendation stage. However, not much is known about mobile shopper marketing. We plug this gap by first discussing mobile shopper marketing and its scope in depth and then presenting a process model that connects the mobile shopping journey with four key entities, i.e., shopper, employee, organization, and mobile technology. For each of these themes, we identify the challenges that offer future research opportunities.

  • Pricing Strategies for Hybrid Bundles: Analytical Model and Insights

    Meyer and Shankar

    by Jeffrey Meyer and Venkatesh Shankar

    This article is forthcoming in Journal of Retailing

    Retailers are increasingly offering hybrid bundles — products that combine both good(s) and service(s). Some hybrid bundles, such as Lowe’s flooring that combines flooring material (good) and flooring installation (service) are sold in traditional stores, while others, such as Best Buy’s bundle that includes a computer (good) and tech support (service) are also offered online. The pricing strategy of a hybrid bundle is critical to its success. While pricing strategies for a goods bundle have been well-studied, those for a services bundle have been underexplored. Hybrid bundles, which fundamentally differ from bundles of goods or bundles of services, primarily with regard to quality variability and scalability, have received even less attention. Drawing from the pricing and bundling literatures for both goods and services, we develop an analytic model of optimal pricing for hybrid bundles by a monopolist retailer. We derive and illustrate many useful propositions, several of which are counter-intuitive. Our results show that an increase in quality variability of the service is associated with a higher optimal hybrid bundle price and a lower optimal price of the good, but a lower overall bundle profit. Our findings also reveal that the optimal price of the service (good) in a hybrid bundle is higher (lower) when the good has diminishing unit cost and the service has constant unit cost (i.e., the good is more scalable than the service). Our results also show that higher unit costs incurred to achieve lower service quality variability can result in higher (lower) profits when the cost increase is low (high). We discuss important implications of these insights for researchers and practitioners.

  • Marriott Starwood Megamerger: Why and What’s the Likely Impact?

    Marriott International has announced that it will acquire Starwood Hotels & Resorts for $12.2 billion, creating the world’s largest hotel chain. This is the largest hotel merger deal since the Blackstone group acquired Hilton hotels for about $26 billion in 2007.

    Why the megamerger now? Starwood stock has been languishing for a while now as investors felt it has not grown fast enough, especially in the affordable hospitality segment. It had explored a sale with Intercontinental Group and Hyatt being possible suitors. Marriott, under CEO, Arne Sorenson has been growing with acquisitions, including the recent purchase of Delta hotels of Canada. It considered Starwood as an opportunity to acquire earlier but found a stock price of $84 to be too expensive. At Starwood’s current price of $72, however, Marriott found it attractive to buy. The combined hotel chain will be in 100 countries with 5,500 properties and 1.1 million guest rooms. Marriott hopes to achieve a cost savings of $200m over two years.

    What is the business rationale for the merger? First, scale is becoming important in the lodging industry. Being able to leverage a larger reservation system to improve occupancy rate and raise Revpar (revenue per available room) is key to profitable growth. Marriott and Starwood are best positioned to combine their strengths in this regard. Second, both these brands can consolidate their loyalty programs and improve loyalty rate and customer lifetime value. Third, the biggest hotel chain will have greater bargaining power over its suppliers and control over its costs. Fourth, because technology is redefining customer experience in the hospitality industry and is capital intensive, the merged company will have a greater ability to shape customer experience.

    What kind of impact will it likely have on travelers and the industry? Like when two big airlines merge, travelers will have the opportunity to benefit from enhanced status when Marriott and Starwood loyalty programs combine.  Customers can search more efficiently for properties under one roof. However, in the past, they might have had choices between competing brands with better prices. Now, they might find the prices of different hotel brands to be coordinated. The combined entity might also retire some brands if it concludes that they are too expensive to maintain as separate brands. The industry will have an 800 pound gorilla that would make it harder for chains like Hyatt and Wyndham to compete. It might offer more opportunities for the companies to innovate around customer experience and business processes.

    Given that the merger needs approvals at several levels, it may be too early to predict what might happen. But it is a watershed event in the hotel industry and we can’t wait to see what lies ahead.

    http://cnb.cx/1lr91RG

  • Keynote @ Michigan Ross Tech Business Innovation Forum

    I keynoted @ Michigan Ross Tech Business Innovation Forum–great speakers & insights. Kudos to Professors Ravi Anupindi and M.S. Krishnan of Michigan Ross for organizing a nice event. Thanks to speakers, Chris Bosco (Accenture), Mike Minelli (24/7),  Dan Newman, Sriram (Michigan Ross), Thomais Zaremba (Ford), Michael Osment (Taubman), and Dennis Maloney (Domino’s) for their fascinating views on omnichannel marketing.

    http://www.bus.umich.edu/Conferences/Technology-and-Business-Innovation-Forum/Schedule.aspx

  • Amazon Opens a Physical Store. Will it Lead to More Physical Stores?

    Amazon opened its first physical bookstore in Seattle on Nov 2. This is not the first time a pure play online retailer has opened a bricks-and-mortar store. Warby Parker and Bonobos have done it before. But Amazon is the 800 pound Gorilla of online retailing and has steadfastly resisted going offline thus far.

    So why did Amazon bite the bullet and open its physical store? Several factors may explain this development. First, despite the phenomenal growth in online retail, a substantial chunk of sales is still offline. People still love to go to physical bookstores and browse books. Second, it could just be an experiment. Amazon may want to test the waters offline given that many pure play online retailers have been doing it before. Third, it could be firing a salvo at Walmart, the world’s biggest offline retailer and its biggest rival, which has made tremendous strides in online retail. Fourth, it may be changing the way brick-and-mortar stores designed. It has designed its physical store with data collected from its online store based on customer reviews and sales measures. Finally, sales of e-books may be leveling or even falling.

    Whatever the reason, when the world’s most valuable retailer like Amazon enters the physical turf, it promises to elevate omnichannel retailing to a new level. Let the games begin!

  • From Cost Obsession to Customer Orientation: Ryan Air

    Does a focus change from excessive cost obsession to customer friendliness lead to better performance? Ask Ryan Air.

    http://cnnmon.ie/1GI2CLE