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Consumer Pseudo-Showrooming and Omni-Channel Product Placement Strategies

Date：2016-06-17 From：

Lecture: Consumer Pseudo-Showrooming and Omni-Channel Product Placement Strategies

Speaker：Prof. Giri Kumar Tayi

Place: Building 25A-3-C

Bio:

Giri Kumar Tayi is a Professor of Management Science and Information Systems at the State University of New York at Albany. He obtained his Ph.D. from Carnegie Mellon University and his research and teaching interests are interdisciplinary and span the fields of Information Systems, Operations Management and Operations Research. His current research streams include E-Commerce and Marketing, Information Sharing in Supply Chains, Economics of Information Systems (Information Security, Software Sample Design, Pricing of Information Goods), Modeling of Online Communities (Creative Commons, Digital Copyright Policies), Geographically Distributed Software Development (Process Choice, Process Diversity, Software Quality), IS Project Outsourcing (Risk Management, Engagement Models), Data Quality and Data Mining, Models and Algorithms for Mobile Computing Environments, Digital Government, Open Data Initiatives, and Grid Computing. Operations Management and Digital Processes, Modeling of Supply Chains (Reverse Logistics, Product Recovery and Return Architectures).

He has published over 55 refereed journal articles, has over 75 conference proceedings/ presentations, has served on about 25 research panels organized by NSF, different academic conferences (such as ICIS, INFORMS, IEEE, CSWIM, ICIQ, PACIS) and several book chapters covering the above three fields. Many of the articles appear in top-tier academic journals such as Operations Research, Information Systems Research, Management Science, MIS Quarterly, IEEE Transactions, Networks, Naval Research Logistics, EJOR, Journal of Combinatorial Optimization, INFORMS Journal of Computing, Journal of Computer Security, Quantitative Marketing and Economics, Government Information Quarterly, Communications of the ACM.

He serves or has served on the Editorial Boards of academic journals such as Information Systems Research (AE and SE), IEEE Intelligent Systems, IEEE Computing Now, Decision Sciences, ACM Journal of Data and Information Quality, Information Technology Management, Information Systems Frontiers, Information and Management, International Journal of Shipping and Transport Logistics, International Journal Internet and Enterprise Management.

Abstract:

Recent advances in information technologies (IT) have powered the merger of online and offline channels into one single platform. Modern consumers frequently switch between online and offline channels when they navigate through various stages of their decision journey, motivating multi-channel sellers to develop omni-channel strategies that optimize their overall profit. This study examines consumer cross-channel product search behavior of “pseudo-showrooming”, or the consumer behavior of inspecting one product at a seller’s physical store before buying a related but different product at the same sellers’ online store, and investigates how such behavior allows a multi-channel seller to achieve better coordination between its online and offline channels through optimal product placement strategies.

We develop a stylized game-theoretic model in which a multi-channel firm offers a product line consisting of two horizontally differentiated products. Consumers are uncertain about the true values of either product. A consumer’s uncertainty regarding a particular products’ value is fully resolved after inspecting that product in person, and can also be partially resolved after inspecting the other related product. By selling only one product item through the dual channel and the other through the online channel exclusively, the firm induces consumer “pseudo-showrooming” for the online exclusive product. Our analysis shows that this product placement strategy generates a greater profit than selling both product items through the dual channel, if the fit probability of individual products and the consumers’ cost for returning a misfit product are both in the intermediate range. Moreover, we find that over a large parameter region, consumers also enjoy a greater total surplus under the placement strategy that induces consumer pseudo-showrooming. Furthermore, we find that the firm garners the most benefit from inducing consumer pseudo-showrooming by selling the higher-quality product or the higher-demand product through the online channel exclusively. Collectively, our study offers a compelling demand-side justification of the commonly witnessed practice among multi-channel sellers to offer products online exclusively when online selling is feasible.

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