The impact of capacity costs on product differentiation in delivery time, delivery reliability, and price

摘要

Firms focus on fast and/or reliabile delivery, besides price, in order to improve customer satisfaction and competitiveness. A strategy used by firms is to differentiate their products with respect to time-based characteristics and use segment pricing to serve different market segments profitably. The authors develop an analytical framework for studying the role capacity costs play in shaping the optimal differentiation strategy in terms of prices, delivery times, and delivery reliabilities of a profit maximizing firm selling two variants (regular and express) in a capacitated environment. The special cases investigated are. An existing model of price and delivery time differentiation with exogenous reliabilities. A model focusing on time-based differentiation with exogenous prices. A case dealing with deciding on all features for an express variant when a regular product already exists in the market. Subsequently, the integrative framework of time-and-price-based differentiation for both products is addressed in a numerical study. The results highlight the role that customer preferences towards delivery times, reliabilities, and prices, and the capacity costs have on the firm's optimal product positioning policy. (19 refs.)