Retail pricing decisions and product category competitive structure

This article constructed a manufacturer-leading supply chain system considering the extended warranty service (EW) with a single manufacturer and a single retailer to study the influence of service cost on the choice of the EW provider. First, this article analyzed retail pricing, EW pricing, EW quality, the manufacturer's profit, the retail's profit and the total system profit in Model M and Model R. Then, the article analyzed the influence of service cost on the choice of the EW provider. Finally, it shows that if only part of consumers purchases the product with the EW, the manufacturer benefits from EW provided by the retailer. However, the retailer has to balance the ratio of the service cost coefficient. Furthermore, all consumers purchase the product with the EW, both the manufacturer and the retailer has to balance the ratio of service cost coefficient between manufacturer and retailer.

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Pricing Decisions of Two Complementary Products in a Fuzzy Environment

Mathematical Problems in Engineering ◽

10.1155/2014/729287 ◽

2014 ◽

Vol 2014 ◽

pp. 1-8 ◽

Cited By ~ 3

Author(s):

Li Wang ◽

Jing Zhao ◽

Jie Wei

Keyword(s):

Closed Form ◽

Stackelberg Game ◽

Reference Model ◽

Optimal Pricing ◽

Pricing Model ◽

Complementary Products ◽

Nash Game ◽

Retail Pricing ◽

Pricing Decisions ◽

Fuzzy Environment

Pricing decisions of two complementary products in a fuzzy environment are considered in this paper. The purpose of this paper is to analyze the changes of the optimal retail pricing of two complementary products under two different decentralized decision scenarios (e.g., Nash game case and Stackelberg game case). As a reference model, the centralized pricing model is also established. The closed-form optimal pricing decisions of the two complementary products are obtained in the above three decision scenarios. Some interesting management insights into how pricing decisions vary with decision scenarios are given.

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An agent-based simulation for a trade-off between frequency and depth in retail price promotion strategy

Management & Marketing. Challenges for the Knowledge Society ◽

10.2478/mmcks-2021-0001 ◽

2021 ◽

Vol 16 (1) ◽

pp. 1-12

Author(s):

Adji Candra Kurniawan ◽

Niniet I. Arvitrida

Keyword(s):

Pricing Strategy ◽

Price Promotion ◽

Agent Based Simulation ◽

Promotion Strategy ◽

Agent Based ◽

Retail Pricing ◽

Pricing Decisions ◽

Customer Preferences ◽

Pricing Decision ◽

Functional Product

Abstract A good pricing strategy helps retailers generate profits, increase sales, and set a strategic position in the market. However, the interactions between retailers and customers add complexity to retailer pricing decisions. This study aims to model retail pricing complexity and analyse retail pricing strategies using an agent-based simulation approach. Two types of agents are modelled: customers and retailers. Customer buying decisions are influenced by several customer preferences factors, while product prices are set according to the retailer’s promotion strategy. The promotion is applied based on the frequency and depth of the price cut. A functional product market is considered in this simulation, representing daily necessities that are purchased regularly, such as foodstuffs and toiletries. The results show that the limited rationality and interactions of each agent drive the unique behaviour of the system, and that each pricing strategy has a different impact on retailer profit and market share. This study provides insights into pricing decision strategies related to price promotion.

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“Meet Me Halfway”: The Costs and Benefits of Bargaining

Marketing Science ◽

10.1287/mksc.2021.1296 ◽

2021 ◽

Author(s):

Xu Zhang ◽

Puneet Manchanda ◽

Junhong Chu

Keyword(s):

Price Discrimination ◽

Structural Model ◽

Empirical Work ◽

Product Category ◽

Primary Data ◽

Costs And Benefits ◽

Loss Of Face ◽

Pricing Decisions ◽

Policy Simulations ◽

Seller Behavior

Bargaining is an important pricing mechanism, prevalent in both online and offline markets. However, there is little empirical work documenting the costs and benefits of bargaining, primarily because of the lack of real-world bargaining data. We leverage rich, transaction-level bargaining data from a major online platform and supplement it with primary data to quantify the costs and benefits of bargaining for sellers, buyers, and the platform. We do this by building a structural model of buyer demand and seller pricing decisions while allowing for the existence of bargaining initiation cost, loss-of-face cost, and price discrimination. Using our results, we perform three policy simulations to quantify the importance of not distinguishing between no-bargain and failed-bargain transactions, ignoring the loss-of-face cost, and not allowing for bargaining. These simulations provide rich details on how the various costs of bargaining impact our understanding of buyer and seller behavior and transaction outcomes. Banning bargaining, in particular, benefits the buyer and the platform greatly but only has a modest benefit for sellers. Finally, we show that our results are robust to our assumptions and replicate in another product category.

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Double Couponing and Retail Pricing in a Couponed Product Category

Journal of Marketing Research ◽

10.1177/002224379503200404 ◽

1995 ◽

Vol 32 (4) ◽

pp. 419-432 ◽

Cited By ~ 3

Author(s):

Trichy V. Krishnan ◽

Ram C. Rao

Keyword(s):

Product Category ◽

Primary Data ◽

Theoretic Model ◽

Retail Pricing ◽

Equilibrium Level ◽

Retail Prices ◽

Game Theoretic ◽

Retail Managers ◽

Game Theoretic Model

A common practice in many supermarkets is double, and in some cases, triple couponing. Retail managers adopting this policy react emotionally to couponing by manufacturers: They “won't tolerate dumping in this marketplace by manufacturers who run 25 cents coupons elsewhere, but 50 cents coupons [t]here.” How justified are retail managers in their claims? Does it really benefit manufacturers to do this? How is the retail pricing of the category affected by the double-couponing policy? And, what happens to the competing retailer that does not double coupon? The authors provide answers to these questions. They use a game theoretic model to (1) study the effects of double couponing, (2) derive the equilibrium level of couponing by manufacturers, and (3) derive the double-couponing retailer's retail pricing of brands in the category, as well as the pricing of the competing retailer that does not follow the double-couponing policy. The authors then test their results using primary data on retail prices.

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Increase in Sales Due to In-Store Display

Journal of Marketing Research ◽

10.1177/002224377501200406 ◽

1975 ◽

Vol 12 (4) ◽

pp. 426-431 ◽

Cited By ~ 21

Author(s):

Michel Chevalier

Keyword(s):

Market Share ◽

Test Item ◽

Product Category ◽

Factorial Experiment ◽

Product Characteristics ◽

The Impact ◽

Competitive Structure

A factorial experiment measures the impact of in-store displays on sales for different product characteristics. Variables related to growth or competitive structure are found significant, while market share of the test item in the product category, level of price cut, and advertising to sales ratio have no effect on the impact of display.

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Advertising and Pricing Decisions with Reference Price Effect

Journal of Advanced Computational Intelligence and Intelligent Informatics ◽

10.20965/jaciii.2018.p0817 ◽

2018 ◽

Vol 22 (6) ◽

pp. 817-822

Author(s):

Erfeng Zhou ◽

◽

Tinglong Zhang ◽

Lei Ni ◽

Chang Fang

Keyword(s):

Reference Price ◽

Product Category ◽

Retail Price ◽

Size Difference ◽

Market Size ◽

Price Effect ◽

Planning Period ◽

Pricing Decisions ◽

Advertising Effort ◽

Demand Rate

Social perception influences product and brand evaluations. Consumers are especially susceptible to reference price effects when they make purchase decisions for a certain product. Meanwhile, the advertising and pricing are the determinable factors that have impact on consumers’ reference price which also are fundamental marketing strategies. Therefore, how to dynamically set advertising and pricing to maximize firms’ profits are essential tasks. We investigate a duopoly market in a mature product category where two firms compete through time using advertising and pricing as their dominated marketing tools. The firms make the advertising and pricing decisions to maximize their own profits in the planning period. The main results of this paper include the following. (i) The optimal retail price and advertising effort are positively correlated to the initial reference price and basic market size. (ii) When the two firms’ initial basic market size are different, the retail price difference is positive correlated to the initial basic market size difference, so is the advertising effort difference. This conclusion will result to that the strong firm is getting stronger and stronger, however, the weak firm is getting weaker and weaker, this is the situation which happen in the e-commerce market, that is winners take all. (iii) The value of the initial reference price can also determines the reference price effect on the consumer demand rate, that is, when the initial reference price is relatively low, the reference price will have a negative effect on the consumers’ demand of both firms in the whole planning period; when the initial reference price is relatively high, the reference price will have a positive effect on the consumers’ demand of both firms in the whole planning period. Whereas, a moderate initial reference price may lead to different effects on demand.

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