This study examines the relation between measurement system satisfaction, economic performance, and two general approaches to strategic performance measurement: greater measurement diversity and improved alignment with firm strategy and value drivers. We find consistent evidence that firms making more extensive use of a broad set of financial and (particularly) non-financial measures than firms with similar strategies or value drivers have higher measurement system satisfaction and stock market returns. However, we find little support for the alignment hypothesis that more or less extensive measurement than predicted by the firm's strategy or value drivers adversely affect performance. Instead, our results indicate that greater measurement emphasis and diversity than predicted by our benchmark model is associated with higher satisfaction and stock market performance. Our results also suggest that greater measurement diversity relative to firms with similar value drivers has a stronger relationship with stock market performance than greater measurement on an absolute scale. Finally, the balanced scorecard process, economic value measurement, and causal business modeling are associated with higher measurement system satisfaction, but exhibit almost no association with economic performance. Disciplines Accounting | Finance and Financial Management | Management Sciences and Quantitative Methods AbstractThis study examines the relation between measurement system satisfaction, economic performance, and two general approaches to strategic performance measurement: greater measurement diversity and improved alignment with firm strategy and value drivers. We find consistent evidence that firms making more extensive use of a broad set offmancial and (particularly) non-financial measures than firms with similar strategies or value drivers hav e higher measurement system satisfaction and stock market returns. However, we find little support for the alignment hypothesis that more or less extensiv e measurement than predicted by the firm's strategy or value drivers adversely affect performance. Instead, our results indicate that greater measurement emphasis and diversity than predicted by our benchmark model is associated with higher satisfaction and stock market performance. Our results also suggest that greater measurement diversity relative to firms with similar value drivers has a stronger relationship with stock market performance than greater measurement on an absolute scale. Finally, the balanced scorecard process, economic value measurement, and causal business modeling are associated with higher measurement system satisfaction, but exhibit almost no association with economic performance.

The bullwhip effect is the phenomenon of increasing demand variability in the supply chain from downstream echelons (retail) to upstream echelons (manufacturing). The objective of this study is to document the strength of the bullwhip effect in industry-level U.S. data. In particular, we say an industry exhibits the bullwhip effect if the variance of the inflow of material to the industry (what macroeconomists often refer to as the variance of an industry's "production") is greater than the variance of the industry's sales. We find that wholesale industries exhibit a bullwhip effect, but retail industries generally do not exhibit the effect, nor do most manufacturing industries. Furthermore, we observe that manufacturing industries do not have substantially greater demand volatility than retail industries. Based on theoretical explanations for observing or not observing demand amplification, we are able to explain a substantial portion of the heterogeneity in the degree to which industries exhibit the bullwhip effect. In particular, the less seasonal an industry's demand, the more likely the industry amplifies volatility--highly seasonal industries tend to smooth demand volatility whereas nonseasonal industries tend to amplify.bullwhip effect, production smoothing, supply chain management, volatility

U sing data from the U.S. bicycle industry, we examine the relation among product variety, supply chain structure, and firm performance. Variety imposes two types of costs on a supply chain: production costs and market mediation costs. Production costs include, among other costs, the incremental fixed investments associated with providing additional product variants. Market mediation costs arise because of uncertainty in product demand created by variety. In the presence of demand uncertainty, precisely matching supply with demand is difficult. Market mediation costs include the variety-related inventory holding costs, product mark-down costs occurring when supply exceeds demand, and the costs of lost sales occurring when demand exceeds supply. We analyze product variety at the product attribute level, noting that the relative impact of variety on production and market mediation costs depends to a large extent on the attribute underlying the variety. That is, some types of variety incur high production costs and some types of variety incur high market mediation costs. We characterize supply chain structure by the degree to which production facilities are scale-efficient and by the distance of the production facility from the target market. We hypothesize that firms with scale-efficient production (i.e., high-volume firms) will offer types of variety associated with high production costs, and firms with local production will offer types of variety associated with high market mediation costs. This hypothesis implies that there is a coherent way to match product variety with supply chain structure. Empirical results suggest that firms which match supply chain structure to the type of product variety they offer outperform firms which fail to match such choices.

User design is a particular form of product customization that allows the customer to specify the properties of a product. User design has emerged as a mechanism to build brand loyalty, to fit products to the heterogeneous needs of a market, and to differentiate the offerings of a manufacturer. However, many consumers face daunting challenges in designing a product that fits their personal needs. This makes it essential for producers of customized goods and services to create user interfaces that are effective in supporting consumers in the user design process. This article defines the fundamental information-processing problem associated with user design of customized products and articulates five principles of user design. It then outlines actions that can be taken to improve user design systems. Disciplines Marketing | Other BusinessThis journal article is available at ScholarlyCommons: http://repository.upenn.edu/oid_papers/251 Principles for User Design of Customized ProductsTaylor Randall Christian Terwiesch Karl T. Ulrich P roduct customization uses a flexible production system to deliver a product to order that matches the needs of an individual customer or user. User design is a particular form of product customization that allows the user to specify the properties of that product. Consider these examples.• At Nikeid.com, consumers can design an athletic OT casual shoe to their specifications on line, selecting almost every element of the shoe from the material of the sole to the color of the shoelace.' • Del! assembles laptop computers to order. Consumers configure their computer using the company's web site.• Eleuria sells custom perfumes. Each product is created in response to a user profile constructed from responses to a survey ahout habits and preferences. Eleuria provides a sample at modest cost to verify fit.* • Lands' End offers customized shirts and pants. Consumers specify style parameters, measurements, and fabrics through the company's web site. These settings are saved so that returning users can easily order a duplicate item.'* • Cannondale allows consumers to specify the parameters that define a road bike frame, including custom colors and inscriptions. The user specifies the parameters on the company's web site and then arranges for delivery through a dealer.Ŵ e acknowledge the substantial contributions of Rachel Nation. Gabe Silvasi, Johnny Lee, Martha Eining, Chetan Salian, Noah Springer, Ryan Sundquist, and Mattias Kellmer. We would also tike to thank Dell Computer. Two anonymous reviewers and the editor provided useful feedback on an earlier version of the article.CALIFORNIA MANAGEMENT REVIEW VOL 47, NO. 4 SU' principles for User Design of Customized Products User design has emerged as a mechanism to huild brand loyally, to fit products to the heterogeneous needs of a market, and to differentiate the offerings of a manufacturer.^ User design offers the possihility of exploiting the capabilities of the Internet to deliver a highly differentiated product instead of intensifyin...

This paper addresses the question of how the vertical structure of a product line relates to brand equity. Does the presence of “premium” or high-quality products in a product line enhance brand equity? Conversely, does the presence of “economy” or low-quality products in a product line diminish brand equity? Economists and marketing researchers refer to variation in quality levels of products within a category as “vertical” differentiation, whereas variation in the function or “category” of the products is referred to as “horizontal” differentiation. Much of the existing research on the relationship between product line structure and brand equity has focused on the horizontal structure of the product line and has been primarily concerned with —what happens when the product line of a brand is extended horizontally into new categories? Researchers have been concerned primarily with how the extension fares, but the effect of the extension on the products is also important. There is an analogous question of what happens when the product line of a brand is extended vertically, either “up market” or “down market.” This question of vertical extensions is part of the more general issue of how the vertical structure of a product line relates to brand equity. The specific research questions addressed in this paper are: (1) do “premium” or high-quality products enhance the brand equity associated with the other products in the line? (2) Conversely, do “economy” or low-quality products diminish the brand equity associated with the other products in the line? These research questions are relevant to three managerial issues in product-line strategy. First, what are the costs and benefits of including “down market” products within a brand? Second, what are the implications of including high-end models within a brand? Third, when should high-end and low-end products be offered under an existing brand umbrella and when should these products be offered under separate brands? We address these research questions empirically through an analysis of the models and brands within the U.S. mountain bicycle industry. We use price premium above that which can be explained by the physical characteristics of the bicycle as a metric for brand equity. We then test several hypotheses related to the relationship between extension of the product line upward and downward and the price premium commanded by the brand. We further support this analysis with a simple laboratory experiment. The analysis reveals that price premium, in the lower quality segments of the market, is significantly positively correlated with the quality of the lowest-quality model in the brand's product line; and, that for the upper quality segments of the market, price premium is also significantly positively correlated with the quality of the highest-quality model in the brand's product line. The results of the analysis are supported by the outcome of an experiment in which 63 percent of the subjects preferred a product offered by a high-end brand to the equivalent product o...