Three Essays on Product Management : How to Offer the Right Products at the Right Time and in the Right Quantity

Across virtually all industries, firms share one common objective: they strive to match their supply with customer demand. To achieve this goal, firms need to offer the right products at the right time and in the right quantity. Only firms that excel in all three dimensions can provide products with a high customer value and achieve extraordinary profits. This thesis investigates specific challenges that a firm has to overcome on its way to a good match between supply and demand. The first essay investigates how a firm can already select the right products during the product development phase. To make good resource allocation decisions, the firm needs to collect valuable information, and incentivize information sharing across the entire organization. The key result is that the firm needs to balance individual and shared incentives to achieve this goal. However, such compensation schemes come at the cost of overly broad product portfolios. The second essay examines how uncertain customer demand patterns affect seasonal products. Specifically, the timing of the product’s availability is crucial. Too early, and high opportunity and inventory costs may devour profits. Too late, and the firm loses its customers. In short, the firm has to balance a product’s market potential with the costly market time. This tradeoff may induce a firm to stock more inventories to satisfy a smaller market potential. Lastly, the third essay investigates how customer substitution influences the inventory decisions of different supply chain members in the presence of upstream competition. We find that customer substitution has a non-monotonic effect on the supply chain members’ decisions, and that left-over inventories may decline even when initial inventories are raised.