Price guarantee for advance selling in the presence of preorder-dependent social learning

Peng, Weicai; Tian, Zhongjun; Wang, Yefeng

doi:10.1016/j.ijpe.2019.05.015

Cited by 27 publications

(16 citation statements)

References 14 publications

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“…Studies have shown that consumers choose to buy products in advance for many reasons, including greater price discounts [2,5,[19][20][21][22] or freebies [23][24][25][26] and the advantage of receiving products earlier [2,6,27]. In addition, some studies focus on eliminating the consumer risk of buying in advance at a higher presale price through price guarantees [20,28], buybacks [29,30] and refunds [30,31]. Many studies adopting various perspectives have examined why sellers use the presale strategy, including to determine market potential and forecast demand in advance [2,32,33], as a price discrimination tool [7,8,19,34], to increase sales volume [1,35,36] and for capacity planning [3,17,26].…”

Section: A Prsale Strategymentioning

confidence: 99%

Presale Strategy for a Dual-Channel Retailer Considering Sales Effort

Feng

Liu

2021

IEEE Access

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We study the presale strategy and decision-making problems for a retailer selling products. Based on the penetration and skimming pricing strategies, we consider the characteristics of consumer market segmentation and valuation heterogeneity, focus on the implementation conditions and optimal decision results of different pricing strategies before and after the introduction of an online presale channel, and conduct a multidimensional comparative study on the impact of the introduction of the online presale channel. We find that the introduction of an online presale channel can always improve the retailer's profitability, but its pricing strategy and sales effort should be adjusted to align with the consumer market segmentation. When the proportion of online consumers is high or their preference for the spot channel is high, the retailer should always adopt a penetration pricing strategy. If online consumers also show a high consumption preference for the presale channel, the retailer should reduce its sales effort to save costs after introducing the presale channel; otherwise, the retailer should increase its sales effort to increase demand in the offline spot channel. When the proportion of online consumers is low and their preference for the spot channel is low, the retailer should always adopt a skimming pricing strategy and keep sales effort unchanged. When the proportion of online consumers and their consumption preference for the spot channel are moderate, the retailer should adjust its pricing strategy from penetration to skimming after introducing the online presale channel and appropriately reduce the level of sales effort.

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Section: A Prsale Strategymentioning

confidence: 99%

Presale Strategy for a Dual-Channel Retailer Considering Sales Effort

Feng

Liu

2021

IEEE Access

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“…Jing [1] conceptualized consumers' SL behavior by assuming that the probability of a potential customer discovering a product's value was a linear function of the product's initial adoption rate. Peng et al [15] investigated a seller's optimal price guarantee policy for advance selling when potential customers practice learning based on preorder quantities. Following this stream of literature, our study systematically analyzes the role of historical sales quantities and SL in firms' pricing policies in a monopoly market.…”

Section: Related Literaturementioning

confidence: 99%

Sales Disclosure and Pricing Policies in the Presence of Social Learning

Rui

Yuan

2021

Mathematical Problems in Engineering

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This study analyzes the role of sales disclosure and social learning (SL) in firms’ optimal responsive pricing policies and profits. If sales quantities are disclosed, potential customers will increase (decrease) their willingness to pay for the product based on the observation of relatively high (low) sales. In a monopoly market, a firm can control initial sales through the initial price, thus influencing consumers’ SL outcomes. We find that disclosing sales quantities and enhancing SL are always beneficial for a firm in a monopoly context. With an increase in the intensity of SL, a monopoly firm has a higher incentive to decrease the initial price of a product to attract early buyers, which is beneficial for consumers. However, consumer surplus may decrease if consumers’ purchase intentions are strongly driven by historical sales quantities. In a duopoly market, learning based on historical sales quantities can encourage potential customers but intensify competition between firms. Thus, in a competitive market, sales disclosure and SL are only beneficial to firms when consumers’ intrinsic valuation of a product is relatively low. Otherwise, SL harms firms.

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“…Consumer preference for the innovation level Decision variables δ 1 Advance selling discount set by the supplier δ 2…”

Section: Two-advance-selling-discountmentioning

confidence: 99%

“…However, social influence may exacerbate strategic consumer behavior. us, some firms offer promotional incentives to recruit some consumers to be influencers, such as advance selling strategy and price guarantee [1]. Research has revealed that a very small number of such influencers are sufficient to diminish sales unpredictability [2].…”

Section: Introductionmentioning

confidence: 99%

The Impact of Advance Selling Strategies on a Three-Echelon Supply Chain in the Presence of Social Influence

Niu

Yang

2020

Mathematical Problems in Engineering

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As the quality of new products is ex-ante uncertain, social influence plays an important role in the diffusion of a new product. An important question is how to expand public knowledge about consumer experience with a new product by using promotion strategies. This paper discusses the impact of advance selling strategies on a three-echelon supply chain when upstream enterprises launch a new product facing strategic consumers under social influence. This problem is modeled as a Stackelberg game, and a two-advance-selling-discount model is presented. Furthermore, we consider the impact of advance purchase behavior on the financing strategy when the retailer places an advance order. Several results are obtained: (i) the consumers’ utility in the second period is increasing in the number of predecessors. (ii) Upstream enterprises will provide deeper advance selling discounts when consumers become more patient or predecessors have a greater influence on imitators. Moreover, the total demand will increase when the consumer’s discount factor decreases or the impact intensity of predecessors increases. However, high innovation levels will drive enterprises to set high advance selling discounts. We also obtain the condition under which the total demand increases quickly as the innovation level changes. (iii) The two-advance-selling-discount model yields Pareto-improved results compared with the case where there is no advance purchase, though it cannot coordinate the supply chain. Finally, we extend the model to analyze the two-advance-selling-discount model with a minimum order quantity constraining the precommitted order quantity, and we show this can allow the enterprises to increase their profits. We also determine a condition under which the upstream enterprises should put a constraint on the minimum order quantity.

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Price guarantee for advance selling in the presence of preorder-dependent social learning

Cited by 27 publications

References 14 publications

Presale Strategy for a Dual-Channel Retailer Considering Sales Effort

Presale Strategy for a Dual-Channel Retailer Considering Sales Effort

Sales Disclosure and Pricing Policies in the Presence of Social Learning

The Impact of Advance Selling Strategies on a Three-Echelon Supply Chain in the Presence of Social Influence

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