The 2007 INFORMS Marketing Society Practice Prize competition

THE NATIONAL ACADEMIES PRESS, TEAMING WITH THE UNIVERSITY OF MARYLAND AND TEXAS A&M UNIVERSITY, WINS THE 2007 SOCIETY FOR MARKETING SCIENCE PRACTICE PRIZE

The 2007 INFORMS Marketing Society Practice Prize competition judges declared a winner at the Inaugural Marketing Science Conference on October 15, hosted by the Wharton School at the University of Pennsylvania. The Prize is supported by grants from the Marketing Science Institute, the Institute for the Study of Business Markets, the European Marketing Academy, and the Australian Marketing Institute.

The winning entry was “Pricing Digital Content Product Lines: A Model and Application for the National Academies Press” by P K Kannan of the University of Maryland, Barbara Kline Pope of the National Academies Press and Sanjay Jain of Texas A&M University.

Their research examines the case of a specialist publisher, the National Academies Press, that was provided an opportunity to distribute multiple formats of its content via the Internet. While digital copies such as pdf files are possible substitutes for printed books, there is complementarity in the form of some consumers buying bundles of both. The authors develop a pricing model for both product forms (separately and together), allowing for both substitution and complementarity effects. The model is then calibrated using an on-line experiment testing different product and bundle prices. The results of this calibration are then validated using actual sales data after the model was implemented. As well as a nice application of modeling to address the bundling problem, the substantive area of interest (balancing the distribution and pricing of digital and hard copy products) is an increasingly important one facing content providers.

2007 saw a particularly strong field of entries from both academia and industry, with many teams mixed with members of both, followed by an exciting set of presentations. As in previous years, presentations with be videotaped and DVDs made available. Copies of the DVDs of past finalists’ presentations are also available.

The Practice Prize is awarded for an outstanding implementation of marketing science concepts and methods. The methodology used must be sound and appropriate to the problem and organization, and the work should have had significant, verifiable and, preferably quantitative impact on the performance of the client organization. The 2007 Practice Prize Committee was comprised of Russ Winer (representing the Marketing Science Institute), Gary Lilien (representing the Institute for the Study of Business Markets), John Roberts (Prize Committee Chair), Steve Shugan (as Marketing Science editor), Manfred Krafft (representing the European Marketing Academy), and Tulin Erdem (as ISMS President), Jorge Silva Risso (as ISMS Practice VP), Peter Danaher and Chuck Weinberg.

The other finalists in the competition were:


V Kumar, Jia Fan (University of Connecticut), Rohit Gulati, and P Venkat (P&G Asia Pacific) “Marketing Mix Recommendations to Maximize Value Growth at P&G Asia-Pacific. The Kumar et al. study worked in conjunction with Proctor and Gamble in India to optimize its marketing mix for higher profits in the Indian heavy-duty detergent market. One of the biggest challenges in executing this study was to come up with a modeling framework that would not only accommodate the complexity in the data structure but also capture the uniqueness of how each SKU would respond to the marketing-mix elements over time. By understanding both the market structure (in terms of the different pricing tiers in the market) and the effect of pricing on distribution, the study provided key strategic guidelines so that Proctor and Gamble was able to increase the price and distribution of certain SKUs. Consequently, significant gains in profits were realized.in this market.

Jie Du, Lili Xie, and Stephan Schroeder (J. D. Power and Associates) “PIN Optimal Auction Vehicle Distribution (ODAV) System: Applying Price Forecasting, Elasticity Estimation, and Genetic Algorithm to Used Vehicle Distribution”. The Du et al. entry examined the U.S. auto resale market. Automotive manufacturers and their captive channels need to remarket their rental fleet return vehicles and lease return vehicles at auctions throughout the country Realized prices depend on a number of characteristics related to the car (make, model, features and condition), the mix of consumers in each geographic area, and local dynamics of supply and demand. Many of these factors are changing quite rapidly. J. D. Power’s model generates a vehicle distribution plan to maximize the auction net profit by considering the auction price arbitrage across the country, costs associated with the vehicle shipping, and business constraints simultaneously. A number of automotive manufacturers and their captives use the system each day to allocate their incoming return vehicles.

As with previous competitions, the presentations were professionally videotaped and have been edited especially for classroom use. These DVD versions of the presentations are in “chapter” format, enabling rapid and easy selection of the aspects of the presentations that instructors wish to highlight. DVD adopters also have access to the papers and the related competition powerpoint presentations for their use in the classroom. This material, along with the material from previous competitions (available now) will be available by the end of February at http://www.informs.org/Edu/MarketingScience

In addition, papers and reports on these outstanding implementations of marketing science will be appearing in a forthcoming issue of Marketing Science. Short 3 to 4 minute summaries of each of the presentations are now available at
http://www2.informs.org/Edu/MarketingScience/

Submitted by John Roberts, Chair 2007 ISMS Practice Prize Competition Committee Contact : JHRoberts@London.edu or johnr@agsm.edu.au