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Potential of Additive-Manufactured Products in Building Brands
Published in Steinar Killi, Additive Manufacturing, 2017
Monika Hestad, Viktor Hiort af Ornäs
When a product is designed it will be categorized with similar products and these together form a product category. Coca-Cola is part of the beverage category but can also be seen as part of the soft drink category. In this category it is a global market leader and has a strong influence on how the category changes. Another product that would like to be part of the soft drink category may try to seek to fit these so-called unwritten category rules.
Category management under non-symmetric demands
Published in International Journal of Systems Science: Operations & Logistics, 2022
Gwo-Ji Sheen, Anh H. G. Nguyen, Yingchieh Yeh
Category management is one of the most critical marketing and operational decisions for retailers. According to ACNielsen (1992), category management is a process that involves managing product categories as business units and customising them to satisfy consumer needs. Unlike product bundle where several products are sold together as a combined package at a lower price than if they are sold individually, a product category refers to a group of products which are perceived to be inter-related and/or substitutable. Several examples for product categories consist of soft drinks, baby care, breakfast food, oral care and meat snacks (Morgan et al., 2007; Progressive Grocer, 2018); while examples for product bundles are TV with DVD player set and Diet Coke with NutraSweet set (Venkatesh & Mahajan, 2009). It shows that the products in a category are interrelated or substitutable while the products in a bundle can be complementary, substitutable or independent. Besides, bundle pricing is a product bundle-related topic that has attracted the attention of researchers (e.g. Banciu et al., 2010; Bulut et al., 2009 and Lin et al., 2020). While category management, which is discussed in our study, has become an interesting topic to product categories from several researchers such as Wang et al. (2003), Kurtuluş and Toktay (2011), Chimhundu et al. (2015) and Nakkas et al. (2020). Moreover, Kök et al. (2015) pointed out that assortment planning requires the retailer to make a trade-off among decisions such as the number of different categories to carry, the number of stock-keeping units (SKUs) in each category and the size of inventory for each SKU, given various constraints. Our work here involves a category of two products regarding decisions such as the choice of category captain, product retail prices, shelf space allocation, and product selection for the category based on the degree of product differentiation. Based on the degree of product differentiation, the retailer can know when the competitive exclusion does not happen under category captainship. Our study provides evidence for the retailer to make decisions regarding the impacts of the product differentiation degree on competitive exclusion. Besides, the demand function in our study is linear and asymmetric which is derived from the utility function of Singh and Vives (1984). Whereas, according to Karampatsa et al. (2017), the two most popular demand models used in assortment planning are the multinomial logit model (e.g. Li, 2007; van Ryzin & Mahajan, 1999; and Miller et al., 2010) and the exogenous demand model (e.g. Kök & Fisher, 2007; Smith & Agrawal, 2000; and Rooderkerk et al., 2013). Furthermore, our problem is optimally solved by using the Lagrange method with Karush-Kuhn-Tucker conditions and backward induction. Backward induction is used to solve our model where the decision-making process is divided into three stages. While, as discussed in Karampatsa et al. (2017), most of the assortment problems are solved by developing heuristics such as iterative heuristic (Kök & Fisher, 2007), neighbourhood search heuristic (Rooderkerk et al., 2013) and specialised heuristic (Li, 2007).