| Name of Speaker | Dong Lingxiu |
| Schedule | 14 March 2025, 10am – 11.30am |
| Venue | BIZ1-0302 |
| Link to Register | https://nus-sg.zoom.us/meeting/register/bA-KLhL7Tzibr9SRmbZpGg |
| Title | Role of Wellness Valuation Uncertainty and Operational Cost Structure in Product Line Design |
| Abstract | The rise of wellness-conscious consumers has led to record demand for products with wellness attributes, such as low-sugar foods and ultraviolet-protective clothing. This market trend presents a profit-growth opportunity for established companies, which have dominated the market based on traditional attributes, such as the taste of food and the appearance of clothing. Yet, taking advantage of this opportunity is challenging due to the increased operational costs associated with delivering products with wellness attributes and the lack of information on consumers’ valuation of wellness. We present a model of a monopolist developing and producing conventional and wellness products to serve a two-segment market consisting of wellness-conscious and wellness-neutral consumers. We propose a two-dimensional differentiation-contingency framework to depict the rich set of possible optimal strategies the firm could use to segment the market and explore how the market environment and the firm’s operational environment affect the firm’s choice of the optimal product strategy. We find that while the high expected wellness valuation drives the optimal strategy to be differentiated, variability in the wellness valuation drives contingency. The contingency dimension is a novel feature in product line design research and enables the firm to hedge its risk of low customer wellness valuation. The firm’s operational cost structure further leads to different prioritization within the wellness product’s quality dimensions: high development cost (resp. high coupling cost between the two quality dimensions) induces prioritization of the traditional (resp. wellness) quality of a wellness product. Examining consumer wellness consumption under the firm’s optimal product strategy offers insights for policy interventions such as consumer educational initiatives and financial incentives to foster innovation. |
| About the Speaker | Lingxiu Dong is the Frahm Family Chair Professor of Supply Chain, Operations, and Technology at the Olin Business School, Washington University in St. Louis. Her research focuses on supply chain management, with particular interests in supply chain control and design, operational flexibility, and integrated risk management. Her recent work explores technology-enabled innovation, sustainability, food and agriculture supply chains, and the interface of operations and finance. |
