Measuring sales resilience value: a new approach on discount pricing strategy to develop the sales promotion program

Abstract

Economic shocks such as pandemics and natural disasters like floods and earthquakes can disrupt the market supply chain. In this study, we address the impact of both negative and positive market disruptions on product demand, and the subsequent need for adaptive strategies by marketing managers. We introduce a novel approach for measuring sales resilience value, which assists in selecting optimal discount pricing strategies during sales promotion programs. Our approach considers various states of demand disruption and is underpinned by research literature concepts and mathematical methods. A sensitivity analysis was conducted to understand the key drivers of our model, providing valuable insights for decision-making. We examined the effects of positive demand disruption on resiliency by altering the level of demand for a product of online platform in Iran during promotion while keeping other parameters constant. Our findings reveal that an increase in demand due to promotion, decreases the company’s resiliency, defined as the ratio of recovery to loss. However, by employing appropriate pricing strategies and promotion policies, companies can adapt to increased demand and improve resiliency over time through actions such as increasing production capacity. This continues until the company reaches its tolerance threshold. These results help offering significant managerial insights for effectively utilizing this concept in real-world applications.