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Tracking Clicks to Drive Operations Value

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Wednesday 7 November 2012, 13:00
LT6, Management School

Dr Tingliang Huang
University College London

Abstract: Recent Internet click tracking technology has generated the fast growing practice of web analytics and stimulated ongoing research in academia. This study is motivated by our interaction with a US manufacturer of industrial products (high-end roll-up doors). Our empirical study reports on an empirical study of the company’s clickstream and sales data to demonstrate the effectiveness of click tracking: It shows that clickstream data provide the company with advance demand information in terms of not only purchasing probabilities and amounts, but also purchasing timing. We find that the company can reduce the inventory holding and backordering cost by 4.6% by using clickstream data for demand forecasting.

The future value of click tracking crucially depends on whether strategic customers are willing to visit a website when they know their clicks may be tracked. This is an important yet complex problem, which depends on various factors. Using a newsvendor framework, we examine this problem by focusing on the operational factor: how product availability induces strategic customers to voluntarily provide advance demand information. We find that a strong Nash equilibrium exists where every customer is willing to click, and customer incentives to click are robust to noise. Hence, we demonstrate the promise of strategic customer behavior in the context of click tracking, contrary to the conventional wisdom that it is typically a peril for the firm. Notably, click tracking is typically advantageous to both the firm and its customers, compared with other strategies such as advance selling, quantity commitment, availability guarantees, and quick response. Lastly, we extend to two settings by including marketing decisions, price-sensitive demand and markdown pricing, and discuss how operations and marketing decisions interact in influencing the value of click tracking.

Brief Biography: Dr. Tingliang Huang is a Lecturer (Assistant Professor) in the Department of Management Science and Innovation (MS&I) at University College London (UCL). He joined the department in 2011 after completing his PhD in Operations Management from the Kellogg School of Management at Northwestern University. His recent research has focused on the roles of clickstream tracking technology and consumer behaviour in operations management. He has broad research interests in manufacturing and service operations management, interfaces of operations, marketing, and economics, and consumer bounded rationality. His research articles have been published or forthcoming in several academic journals, such as Production and Operations Management, Manufacturing & Service Operations Management, and Naval Research Logistics. He teaches the course Business Analytics in the B.Sc. in Information Management for Business program at UCL. He has consulted for industries such as General Mills.

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