The ability to identify customers' dynamics and its drivers present an opportunity for firms to optimize their marketing resource allocation and increase long-run profitability. Accordingly, we address the following managerial questions in this research: (1) how can firms dynamically segment...

Over the course of a repeated game, players often exhibit some degree of learning in selecting their best response. Research in economics and marketing has identified two key types of learning rules: belief and reinforcement. It has been shown that players use either one of the these learning...

We propose a Hidden Markov Model (HMM) approach to identifying on-shelf out-of-stock (OOS) by detecting changes in sales patterns due to unobserved states of the shelf. We calibrate our model using point-of-sales (POS) data from a big-box retailer. We validate our approach using visual...

While many studies have investigated consumer purchase behavior in reward programs, a better understanding of customer redemption behavior is lacking, particularly when promotions affect a core aspect of reward programs—free rewards. In this paper, we examine the impact of a promotion on...

This paper identifies four attentional processes that increase efficiency and accuracy in repeated lexicographic tasks using an instructed strategy approach. We propose a framework to decompose attentional effort used to make a decision into four components: Orientation, Wrong Target, Duration,...

Companies in diverse industries have to decide the pricing policy of their inventory over time. This decision becomes particularly complex when customers accommodate their purchase decision in the hope of future discounts and promotions. With such uncertainty, many of these customers may end up...

We describe a model examining how a firm might choose the package size and price for a product that deteriorates over time. Our model considers four factors: (1) the usable life of the product; (2) the rates at which consumers use the product; (3) the relation between package size and the...

The use of a durable good is limited by both its physical life and usable life. For example, an electric-car battery can last for 5 years (physical life) or 100,000 miles (usable life), whichever comes first. We propose a framework for examining how a profit-maximizing firm might choose the...

Similar to in-store displays in brick-and-mortar stores, house ads promote a set of specific products for customers who have reached the website. In contrast to general display advertising whose primary goal is to bring traffic to the website, these self-promotional ads are aimed to highlight...

The compromise effect denotes the finding that brands gain share when they become the intermediate rather than an extreme option in a choice set (Simonson 1989). Despite the robustness and importance of this phenomenon, choice modelers have neglected to incorporate the compromise effect within...