Knowledge that Transforms

We examine the key factors that influence a firm's decision whether to use front-loaded or rear-loaded incentives. When using price packs, direct mail coupons, FSI coupons or peel-off coupons, consumers obtain an immediate benefit upon purchase or a front-loaded incentive. However, when buying products with in-pack coupons or products affiliated with loyalty programs, promotion incentives are obtained on the next purchase occasion or later, i.e., a rear-loaded incentive. Our analysis shows that the innate choice process of consumers in a market (variety-seeking or inertia) is an important determinant of the relative impact of front-loaded and rear-loaded promotions. While in both variety-seeking and inertial markets, the sales impact and the sales on discount are higher for front-loaded promotions than for rear-loaded promotions, from a profitability perspective, rear-loaded promotions may be better than front-loaded promotions. We show that in markets with high variety-seeking it is more profitable for a firm to rear-load, and in markets with high inertia it is more profitable to front-load. Model implications are verified using two empirical studies: (a) a longitudinal experiment (simulating markets with variety-seeking consumers and inertial consumers) and (b) market data on promotion usage. The data in both studies are consistent with the model predictions.

This article studies a continuous-time yield management model in which reversible price changes are allowed. We assume that perishable assets are offered at a set of discrete price levels. Demand at each level is a Poisson process. To maximize the expected revenue, management controls the price dynamically as sales evolve. We show that a subset of these prices that form a concave envelope is potentially optimal. We formulate the problem into an intensity control model and derive the optimal solution in closed form. Properties of the optimal solution and their policy implementations are discussed. Numerical examples are provided.

Like all teams, knowledge teams must acquire and manage critical resources in order to accomplish their work. The most critical resource for knowledge teams is expertise, or specialized skills and knowledge, but the mere presence of expertise on a team is insufficient to produce high-quality work. Expertise must be managed and coordinated in order to leverage its potential. That is, teams must be able to manage their skill and knowledge interdependencies effectively through expertise coordination, which entails knowing where expertise is located, knowing where expertise is needed, and bringing needed expertise to bear. This study investigates the importance of expertise coordination through a cross-sectional investigation of 69 software development teams. The analysis reveals that expertise coordination shows a strong relationship with team performance that remains significant over and above team input characteristics, presence of expertise, and administrative coordination.