Optimal pricing and composition of multiple bundles: A two-step approach

Cataldo, Alejandro; Ferrer, Juan Carlos

doi:10.1016/j.ejor.2016.11.010

Cited by 23 publications

(13 citation statements)

References 22 publications

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“…They found that total supply chain profit under manufacturer bundling dominates retail bundling. Using mixed-integer nonlinear programming, Cataldo and Ferrer (2017) analysed a problem faced by a firm in a single market segment to determine the optimal composition and pricing of multiple bundles.…”

Section: Bundling In Marketing and Supply Chainmentioning

confidence: 99%

“…Most studies, to date, focus on various models of bundling in supply chain management (e.g., Arora 2008;Cataldo and Ferrer 2017;Giri et al 2020;Vamosiu 2018;Lin et al 2020); though very limited studies have addressed bundling price policy in the supply chain under competition (Chakravarty et al 2013;Chen and Wang 2015;Ma and Mallik 2017;Vamosiu 2018). For instance, Yan et al (2014) discuss the bundling pricing policy under a single manufacturer and retailer.…”

Section: Introductionmentioning

confidence: 99%

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Product bundling and advertising strategy for a duopoly supply chain: a power-balance perspective

Jena

Ghadge

2020

Ann Oper Res

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The paper studies product bundling in a duopoly supply chain network under the influence of different power-balance structures, bundling decisions and advertising efforts on total supply chain profit. Mathematical models comprising two manufacturers and a single retailer are developed to capture the impact of bundling policy and advertisement strategy under three power-balance structures, namely Manufacturer Stackelberg, Retailer Stackelberg and Vertical Nash. Following game theory models and numerical examples, the study found that the total profit of the supply chain is undifferentiated under the manufacturer Stackelberg and Vertical Nash case in the manufacturer bundling and retailer bundling strategies. However, total supply chain profit under manufacturer bundling strongly dominates under retailer bundling in Retailer Stackelberg and Vertical Nash, and remains valid under multiple settings of market size, price elasticity and advertising elasticity. It is also found that manufacturer bundling is significantly affected by advertising effort compared to retailer bundling. The study contributes to the literature interfacing supply chain and marketing by studying bundling policy and advertising strategy simultaneously for homogenous products, under various power-balance structures and price competition.

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Section: Bundling In Marketing and Supply Chainmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Product bundling and advertising strategy for a duopoly supply chain: a power-balance perspective

Jena

Ghadge

2020

Ann Oper Res

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“…They employed a recommender system platform to identify bundles and prices, maximizing both the likelihood of buying a product bundle by the customer and the revenue earned by selling that product bundle. Cataldo and Ferrer (2017) presented a programming model to find the optimal composition and pricing of multiple product bundles.…”

Section: Literature Reviewmentioning

confidence: 99%

A novel model for product bundling and direct marketing in e-commerce based on market segmentation

Beheshtian-Ardakani¹,

Fathian²,

Gholamian³

2018

10.5267/j.dsl

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Nowadays, companies offer product bundles with special discounts in order to sell more products. However, it is important to note that customers show different levels of loyalties to companies, and each segment of the market has unique features, which influences the customers' buying patterns. The primary purpose of this paper is to propose a novel model for product bundling in e-commerce websites by using market segmentation variables and customer loyalty analysis. RFM model is employed to calculate customer loyalty. Subsequently, the customers are grouped based on their loyalty levels. Each group is then divided into different segments based on market segmentation variables. The product bundles are determined for each market segment via clustering algorithms. Apriori algorithm is also used to determine the association rules for each product bundle. Classification models are applied in order to determine which product bundle should be recommended to each customer. The results demonstrate that the silhouette coefficient, support, confidence, and accuracy values are higher when both customer loyalty level and market segmentation variables are used in product bundling. Accordingly, the proposed model increases the chance of success in direct marketing and recommending product bundles to customers.

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“…Also there are many studies that examine bundling problem in a duopolistic or oligopolistic market (e.g., Liao & Tauman, 2002). Cataldo and Ferrer (2016) developed a two-step approach to determine the optimal price and composition of the bundles when the price and characters of competitors' bundles are known. Meyer and Shankar (2016) presented an analytical model to optimize the price of hybrid service bundles by a monopolist retailer.…”

Section: Literature Of Bundlingmentioning

confidence: 99%

Integrating assortment selection, pricing and mixed-bundling problems for multiple retail categories under cross-selling

Rabbani¹,

Salehi²,

Farshbaf‐Geranmayeh³

2017

10.5267/j.uscm

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This paper optimizes joint mixed bundling, assortment planning and pricing problems for complementary retail categories that comprise substitutable items. These categories are divided into one primary category and multiple secondary categories and based on cross-selling effect, customers of primary category can opt to buy from other categories. It is assumed that the bundle can comprise one product of each offered complementary categories. A mixed-integer nonlinear programming is proposed that maximizes total profit by optimizing strategy of bundling, assortment selection and prices of single products and the bundle under a maximumsurplus customer choice model. Then because of computational considerations, this model is linearized and converted to a mixed-integer linear programming; whereby exact solution for even large-scale problems can be obtained. The results show that if cross-selling effect between product categories is overlooked or bundling of products is not allowed, then significant profit losses, will be resulted. To the best of our knowledge, this is the first study on bundling strategies in assortment selection decisions.Growing Science Ltd. All rights reserved. 7

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Optimal pricing and composition of multiple bundles: A two-step approach

Cited by 23 publications

References 22 publications

Product bundling and advertising strategy for a duopoly supply chain: a power-balance perspective

Product bundling and advertising strategy for a duopoly supply chain: a power-balance perspective

A novel model for product bundling and direct marketing in e-commerce based on market segmentation

Integrating assortment selection, pricing and mixed-bundling problems for multiple retail categories under cross-selling

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