IDEAS home Printed from https://ideas.repec.org/a/inm/ormksc/v28y2009i4p620-636.html
   My bibliography  Save this article

—Pricing Digital Content Product Lines: A Model and Application for the National Academies Press

Author

Listed:
  • P. K. Kannan

    () (Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742)

  • Barbara Kline Pope

    () (The National Academies, Washington, DC 20001)

  • Sanjay Jain

    () (Mays School of Business, Texas A&M University, College Station, Texas 77843)

Abstract

We examine the problem of how a content provider, specifically the National Academies Press (NAP), can optimally price the different forms of its product—print and PDF—that it sells online. Whereas products in the traditional product line generally tend to be substitutes, the different content product forms could range from being substitutes to being complements across customers. Thus the content provider can possibly sell bundles of the product forms, leading to additional revenue. We first discuss NAP's decision context and describe the model we proposed for developing NAP's optimal pricing policies for its different forms. We describe the choice experiment we conducted on the publisher's website that maximally uses the online interface to collect relevant data needed to estimate our model. We show how NAP embraced the results from the model for developing a new business model and how it used the insights derived from the study to set pricing policies and monitor sales performance as a function of pricing. Finally, we perform validation of the model and the implemented policies using dynamic modeling of sales data from NAP's website. The paper illustrates how e-commerce technologies can lead to the development of optimal policies using marketing models.

Suggested Citation

  • P. K. Kannan & Barbara Kline Pope & Sanjay Jain, 2009. "—Pricing Digital Content Product Lines: A Model and Application for the National Academies Press," Marketing Science, INFORMS, vol. 28(4), pages 620-636, 07-08.
  • Handle: RePEc:inm:ormksc:v:28:y:2009:i:4:p:620-636
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mksc.1080.0481
    Download Restriction: no

    References listed on IDEAS

    as
    1. Wendy W. Moe & Peter S. Fader, 2004. "Dynamic Conversion Behavior at E-Commerce Sites," Management Science, INFORMS, pages 326-335.
    2. Sanjay Jain, 2008. "Digital Piracy: A Competitive Analysis," Marketing Science, INFORMS, vol. 27(4), pages 610-626, 07-08.
    3. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, pages 159-178.
    4. Gregory Dobson & Shlomo Kalish, 1988. "Positioning and Pricing a Product Line," Marketing Science, INFORMS, vol. 7(2), pages 107-125.
    5. Jie Zhang & Lakshman Krishnamurthi, 2004. "Customizing Promotions in Online Stores," Marketing Science, INFORMS, vol. 23(4), pages 561-578, June.
    6. R. Venkatesh & Wagner Kamakura, 2003. "Optimal Bundling and Pricing under a Monopoly: Contrasting Complements and Substitutes from Independently Valued Products," The Journal of Business, University of Chicago Press, vol. 76(2), pages 211-232, April.
    7. Peter H. Farquhar & Vithala R. Rao, 1976. "A Balance Model for Evaluating Subsets of Multiattributed Items," Management Science, INFORMS, pages 528-539.
    8. Rajeev Kohli & R. Sukumar, 1990. "Heuristics for Product-Line Design Using Conjoint Analysis," Management Science, INFORMS, pages 1464-1478.
    9. K. Sridhar Moorthy & I. P. L. Png, 1992. "Market Segmentation, Cannibalization, and the Timing of Product Introductions," Management Science, INFORMS, pages 345-359.
    10. V. Srinivasan & Amiya K. Basu, 1989. "The Metric Quality of Ordered Categorical Data," Marketing Science, INFORMS, vol. 8(3), pages 205-230.
    11. Alberini Anna, 1995. "Optimal Designs for Discrete Choice Contingent Valuation Surveys: Single-Bound, Double-Bound, and Bivariate Models," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 287-306, May.
    12. McConnell, K. E., 1990. "Models for referendum data: The structure of discrete choice models for contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 19-34, January.
    13. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    14. Paul E. Green & Abba M. Krieger, 1985. "Models and Heuristics for Product Line Selection," Marketing Science, INFORMS, vol. 4(1), pages 1-19.
    15. Manski, Charles F & Lerman, Steven R, 1977. "The Estimation of Choice Probabilities from Choice Based Samples," Econometrica, Econometric Society, vol. 45(8), pages 1977-1988, November.
    16. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, pages 159-178.
    17. William James Adams & Janet L. Yellen, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, Oxford University Press, pages 475-498.
    18. Gregory Dobson & Shlomo Kalish, 1993. "Heuristics for Pricing and Positioning a Product-Line Using Conjoint and Cost Data," Management Science, INFORMS, pages 160-175.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. James Agarwal & Wayne DeSarbo & Naresh K. Malhotra & Vithala Rao, 2015. "An Interdisciplinary Review of Research in Conjoint Analysis: Recent Developments and Directions for Future Research," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), pages 19-40.
    2. Paulo Albuquerque & Polykarpos Pavlidis & Udi Chatow & Kay-Yut Chen & Zainab Jamal, 2012. "Evaluating Promotional Activities in an Online Two-Sided Market of User-Generated Content," Marketing Science, INFORMS, pages 406-432.
    3. Li Chen, 2016. "Selling or Renting: Competition of Electronic Book Retailers," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 6(5), pages 1-2.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:28:y:2009:i:4:p:620-636. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: http://edirc.repec.org/data/inforea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.