Show Me the Money: The Economic Impact of Membership-Based Free Shipping Programs on E-Tailers

This research examines the economic impact of membership-based free-shipping (MFS) programs when introduced as an augmentation to widely accepted contingent free-shipping (CFS) policies. Under CFS, consumers waive the shipping surcharge if the order exceeds a certain threshold, whereas under MFS, consumers pay an upfront fee and enjoy the free-shipping perk throughout the membership period. We develop a stylized model that considers consumer heterogeneity in two dimensions: (1) disutility from acquiring an auxiliary product—a product that consumers would not otherwise purchase—to qualify for CFS; and (2) shopping frequency over a given period. Our analysis suggests that the introduction of MFS allows the e-tailer to segment the market further, which could lead to a higher product price. When the disutility from acquiring an auxiliary product is moderate, the e-tailer should charge a high membership fee to target only frequent shoppers who forgo CFS. However, the e-tailer should lower the fee to lure also (1) frequent shoppers who would otherwise take CFS, when the disutility is high; or (2) infrequent shoppers who would otherwise forgo CFS, when the disutility is low. In all cases, although the collected fee revenue can never compensate for the cost arising from offering the free-shipping perk, the loss can be recouped as a desirable outcome of a more segmented market. Our research generates insights into the optimal design of e-tailers’ shipping policies, shedding light on the practical challenges that confront e-tailers.

THE USE OF COMPETITION AS A COMMUNICATION STRATEGY (To Increase Engagement as a Form of Brand Awareness about Local Skateboarding Shoes in Jabodetabek Area)

The rapid development of skateboarding in Indonesia serves as a business opportunity for local entrepreneurs. Although the skateboard market in Indonesia is classified as a segmented market, but it is still a promising business. Local skateboarding shoes brand developed quite rapidly along with the development of skateboarding sports in Indonesia, this is portrayed by the high level of enthusiasm by the society who starting to play skateboard, the high amount of local skateboarding communities appears in Jabodetabek area and plentiful skateboarding events and competitions. The result of this research shows that there has been a lot of skateboarding competition in Indonesia which has been used as a communication strategy. Competitions are considered good and effective for local skateboarding shoes brand to increase engagement as a form of brand awareness, because they can take part either as the supporting element or as the skateboarding competition organizer. Besides, it also can bring a positive impression to the brands itself. In addition, the competitions held offline needs to be supported by online activities and the source includes education elements. Berlo’s Communication Model (SMCR) explains that when using a competition, it needs to be based on the communication skills, the understanding of social and cultural systems of the source and the receiver to the message that can be felt by the human five senses which will increase the success of delivering messages from the source to the receiver. The methodology of this research is qualitative and the instrument used to collect data involves interviews.Abstrak. Pesatnya perkembangan skateboard di Indonesia menjadi peluang bisnis bagi para pengusaha lokal. Meskipun pasar skateboard di Indonesia tergolong sebagai pasar yang tersegmentasi, namun bisnis pada industri ini tetap menjanjikan. Merek sepatu skateboard lokal berkembang cukup pesat seiring dengan perkembangan olahraga skateboard di Indonesia, hal ini dapat dilihat dari tingginya antusiasme masyarakat yang mulai bermain skateboard, jumlah komunitas skateboard lokal yang bermunculan di daerah Jabodetabek, hingga banyaknya acara dan kompetisi bertajuk skateboard. Hasil penelitian ini menunjukkan bahwa terdapat banyak kompetisi skateboard di Indonesia yang telah digunakan sebagai strategi komunikasi. Kompetisi dianggap baik dan efektif bagi para merek sepatu skateboard lokal untuk meningkatkan keterlibatan masyarakat sebagai bentuk kesadaran merek, karena mereka dapat berperan sebagai elemen pendukung atau penyelenggara kompetisi skateboard. Kompetisi juga dapat memberikan kesan positif bagi merek itu sendiri. Selain itu, kompetisi yang diadakan secara offline perlu didukung oleh aktivitas online dan mencakup unsur edukasi. Model Komunikasi Berlo (SMCR) menjelaskan bahwa ketika menggunakan sebuah kompetisi, perlu didasarkan pada keterampilan komunikasi, pemahaman csistem sosial dan budaya dari sumber dan penerima pesan yang kemudian dapat dirasakan oleh panca indera manusia untuk meningkatkan keberhasilan penyampaian pesan dari sumber ke penerima. Metode penelitian ini adalah kualitatif dan instrumen yang digunakan untuk mengumpulkan data adalah wawancara.

Optimal Promotional Effort Policy in Innovation Diffusion Model Incorporating Dynamic Market Size in Segment Specific Market

Due the increasing globalization of market and diverse consumer groups, market segmentation becomes an ever more important concept in current market scenario. After market segmentation, firms use the available promotional strategies to target market. In this paper, we present a model of determining the optimal dynamic promotional policies for a product in segmented market incorporating dynamic market size, where sales is assumed to be evolved through mass and differentiated promotion. Mass promotional effort is allowed in whole market with a fixed spectrum for each segment while differentiated promotion is targeted to each segment independently. The optimal promotional effort policy for each segment is obtained by applying maximum principle. Numerical illustrations are provided to show the effectiveness of the proposed method and solution procedure by discretizing the optimal control model. Furthermore, sensitivity analysis of the discount rate parameter is carried out and presented.

Peer-to-Peer Lending and Bank Risks: A Closer Look

This study examined how the expansion of peer-to-peer (P2P) lending affects bank risks, particularly insolvency and illiquidity risks. We compared a benchmark case wherein banks are the only players in the loan market with a segmented market case wherein the loan market is segmented by borrowers’ creditworthiness, P2P lending platforms operate only in the low-credit market segment, and banks operate in both low- and high-credit segments. For the segmented market case compared with the benchmark one, we find that, while banks’ insolvency risk increases, their illiquidity risk decreases such that their overall risk also decreases. Our results imply that sustainable P2P lending requires an appropriate differentiation of roles between banks and P2P lending platforms—P2P lending platforms operate in the low-credit segment and banks’ involvement in P2P lending is restricted—so that the growth of P2P lending is not adverse for bank stability.

Segmented market economies in the Arab world: the political economy of insider–outsider divisions

This article argues that the low dynamism of low- to mid-income Arab economies is explained with a set of interconnected factors that constitute a particular variety of capitalism which we call ‘segmented market economy’. These include an over-committed and interventionist state; deep insider–outsider divides in private sectors and labor markets that result from and reinforce lopsided state intervention; and an equilibrium of low skills and low productivity that results from and reinforces insider–outsider divides. These mutually reinforcing features undermine encompassing cooperation between state, business and labor. While some of these features are generic to developing countries, others are regionally specific, including the relative importance and historical ambition of the state in the economy and, closely related, the relative size and rigidity of the insider coalitions created through government intervention. Insiders and outsiders exist everywhere, but the divisions are particularly stark, immovable and consequential in the Arab world.

Optimal control policy to production and inventory system with promotion effort dependent demand in segmented market

Increased competition in market leads to the interaction between marketing and production of a firm in segmented market. This paper considers the problem of finding an optimal promotion and production strategy, where the consumer demand rate depends on differentiated and mass promotion efforts. Differentiated promotions can reach each segment independently and mass promotion reaches it with a fixed segment-spectrum. Under reasonable conditions, two optimal control problems are formulated. The first one considers a single source inventory and multi-segmented demand problem. In the second, a multi-segmented inventory and demand problem is considered, where it is assumed that the firm chooses an inventory directed to each segment. The solution to both problems is obtained by using Pontryagin's maximum principle. Numerical examples are provided to illustrate the applicability of proposed models. The discretized version of the problem is formulated and solved on some numeric data.