Stylized Retailer Model--论文代写范文

然而,值得注意的是,无法预测最优产品选择和需求弹性之间的关系。当考虑选择第二个产品,零售商可能会发现产品商务的最佳选择，尽管大多数消费者觉得这是他们最不喜欢的。下面的paper代写范文进行论述。

Abstract
  A rigorous theoretical analysis of optimal brand and flavor selection is exceedingly complex, though the retailer’s problem is reasonably straightforward. We begin with the assumption that retailers maximize profits for the ice cream category at their store and the number and preferences of consumers are exogenous with respect to ice cream category decisions. 

  A small but growing literature has started the process of solving this dif- ficult problem. Earlier work, such as Costjens & Doyle (1981) and Bultez & Naert (1988) began by addressing the related question of how to optimally allocate an exogenous amount of shelf space, once the set of products to be offered had been determined. Dobson & Kalish (1988) examine the complementary problem of optimal pricing once the set of products is established. A recent paper by Chong, Ho & Tang (2001) considers the endogenous determination of the category assortment - and is, in fact, motivated by observation of the ice cream category. 

  This paper, and several of the others in this literature, address the inherent complexities by developing heuristics and al- gorithms to guide practitioners, rather than deriving robust predictions from the optimization problem. A paper by Aydin & Ryan (2000) is closest to the spirit of the analysis that we are pursuing here. They work with a slightly simpler problem, to the extent that product differentiation is assumed to be vertical and substitution patterns between products are constrained to be proportional to market shares. Using this set up, they are able to establish some simple, intuitive results: for example, that a retailerÆs optimal product line should consist of the products that have the highest potential margins and that the profitability of adding more products decreases with the number of products produced. It is worth noting, however, that these authors are not able to make predictions about the relationship between optimal product selection and demand elasticities, given their assumptions. Their model is also simpli- fied by the fact that it does not constrain prices for all flavors within a given brand to be equal.

  When considering the choice of a second product, the retailer may well find the product BZ as the optimal choice - even though most consumers find it to be their least favorite option. The product BY likely has the second highest average utility; however, few consumers would switch from product AY to product BY if both were offered. In contrast, product BZ will attract many type 2 consumers, some of whom would be willing to switch from product AY and others that previously did not purchase. In addition, the retailer may be able to raise its price for product AY since it would no longer be trying to sell this product to type 2 consumers. 

  Offering a second flavor would be profitable for the retailer provided that the revenue from these two sources exceeds the additional costs associated with the extra product BZ. Therefore, there are two critical factors necessary for the retailers to consider in optimal flavor selection. The first is, naturally, overall utility – retailers will be able to sell more ice cream at a higher price to the extent that consumers demand those products more. This is the intuition that is provided by the analysis of Aydin and Ryan, when they conclude that higher margin products are those most likely to be offered. 

  Since we do not have any available data on costs, we will only be able to examine utility differences among flavors. Beyond that, optimal product selection will depend critically on the extent to which utility for the products with lower demand are correlated with the utility for the most desired products. If product B has a lower average utility than product A, and U(B) ¿ U(A) for every consumer, then introducing product B in addition to product A would add nothing to the retailerÆs profits. 

  On the other hand, if a product C exists such that there is some measure of consumers that have U(C) ¿ U(A), then it may be profitable to introduce product C along with product A. Note that in this case, the retailer would profit more from offering product C, even if it had a lower average utility than product B. To the extent that consumersÆ utility for products are more highly correlated among products within the same quality tier, or among same-flavor or same-brand products, we would expect the retailers’ optimal product portfolio to exhibit greater levels of variability. Note that factoring in optimal product selection may complicate demand estimation and calculation of elasticities. Our identification strategy takes advantage of the considerable variation in the portfolio of products offered in each store-week observation. However, there may be different implications for demand estimation if these portfolios are generated based on retailer profit maximization as opposed to being selected randomly, which we will assume to start. We will analyze how the product portfolios offer might differ from what we would expect if retailers were maximizing profits using our price elasticity estimates.

  Finally, the analysis of retailer behavior will have implications for manufacturers. This will be particularly true with regard to the choice made by firms over which flavors to manufacture. Prior literature has demonstrated an advantage in having longer product lines – the analysis here will focus on the importance of the composition of product lines in terms of flavors offered. Clearly, manufacturers will want to produce products that retailers prefer to stock on their shelves, so to the extent that retailers choose based on demand substitution patterns, offering unique flavors may be more profitable for the manufacturers. It is interesting to note that - returning to Table 5 - while the number of flavors offered by firms in the various quality tiers is similar, it is striking that most of the unique flavors are offered by the high quality manufacturers. We intend to use the retailer model of flavor selection as a sort of demand model with respect to the supply choices made by manufacturers.(paper代写)

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