Demonstrations and Price Competition in New Product Release

Boleslavsky, Raphael; Cotton, Christopher

doi:10.1287/mnsc.2016.2449

Cited by 45 publications

(21 citation statements)

References 30 publications

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“…Hence one explanation for the Huawei's practice is that, before the release of the smartphone, the extent of ex-ante product information perceived by consumers is relatively low, hence Huawei adopts a relatively high proportion of prepayment. With the increase of extent of ex-ante product information due to information sharing between consumers [30], Huawei decreases the prepayment proportion.…”

Section: Corollary 7 the Retailer's Profit In The Map Scenario Has Fmentioning

confidence: 99%

Advance Selling with Part Prepayment and Consumer Returns

Sun

Siqin

2018

Mathematical Problems in Engineering

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Part prepayment scheme can induce more consumers to purchase the product in advance but may also lead to the increase in consumer returns. This study develops a two-period theoretical model to examine the interaction between the part prepayment scheme and the return policy and its effect on the retailer’s profit. Our analysis yields the following insights. First, part prepayment scheme can help the retailer to increase the demand without sacrificing the advance selling price. Second, the prepayment proportion and the consumers’ hassle cost of return have a negative cross effect on the retailer’s profit, which indicates that when the consumers are allowed to preorder the product with a relatively low proportion of prepayment, the retailer should impose more restrictions to increase the consumers’ hassle cost of return. Third, the prepayment proportion and the ex-ante product information perceived by consumers also have a negative cross effect on the retailer’s profit, which indicates that the retailer should consider the degree of product information disclosure when adopting the part prepayment scheme. We also extend the model to incorporate the retailer’s handling cost of consumer returns and find that it is beneficial for the retailer to require a full prepayment when the handling cost is relatively high.

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Section: Corollary 7 the Retailer's Profit In The Map Scenario Has Fmentioning

confidence: 99%

Advance Selling with Part Prepayment and Consumer Returns

Sun

Siqin

2018

Mathematical Problems in Engineering

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“…Thus, in this paper, the sales effort we discuss mainly refers to the various marketing means adopted by the retailer in its offline physical stores to increase sales, such as whether the retailer's investment in the display of the products sold includes all types, styles and colors for consumers to experience and whether the function demonstration and introduction of the products by the sales staff of the physical store are specific and clear. Several studies [73][74][75] have shown that this kind of sales effort to increase consumer experience or deepen consumer understanding of a product can increase its purchase utility and have a direct impact on its purchase decision. We assume that the sales effort of the retailer in physical stores is s , and the corresponding effort cost function is represented as Similar to He, et al [79] and Feng, et al [8], we assume that there are two types of consumers in the market, namely, traditional consumers and online consumers.…”

Section: Problem Description and Notationmentioning

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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“…They consider that the retailer's choice of refusing returns can help eliminate the manufacturer's incentive to induce inefficient consumer returns. Boleslavsky, Cotton, and Gurnani (2017) explore an innovative firm's product demonstration strategy when facing a competitor who offers an established product. They find that the innovative firm should fully disclose product information when prices respond to the demonstration policy, but when the innovative firm can adjust its demonstration strategy in response to prices, he prefers a partially informative demonstration.…”

Section: Literature Reviewmentioning

confidence: 99%

Competitive fit‐revelation sampling and mixed pricing strategy

Ling-li

Deng

2020

Naval Research Logistics

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When firms launch new products, consumers may be uncertain about whether these products fit their individual preferences before they have any personal experience with them. Such consumer fit uncertainty is very common for products sold online. To resolve this uncertainty, firms may provide fit‐revelation sampling along with competitive pricing depending on their competitors' strategies. In this paper, we formulate a game‐theoretical model to study the fit‐revelation sampling strategies for two competing firms of substitute products in a market consisting of switchers and nonswitchers. We derive equilibrium sampling and pricing strategies and provide conditions under which the two firms adopt symmetric or asymmetric sampling strategies. Our analysis provides possible explanations on why different sampling strategies are observed among competing firms in practice. We show that fit‐revelation sampling can be an important market differentiation tool. Adopting asymmetric sampling strategies, the two firms can take advantage of the market differentiation effect to avoid head‐on competition and make both of them better off. Counter‐intuitively, the profits of both firms can be increasing in the degree of competition (i.e., the size of switchers), and decreasing in the size of nonswitchers. We also provide new insights on the cause of price dispersion for competing firms facing consumer fit uncertainty. This would help firms to adjust their promotion strategies in accordance with their sampling campaigns. We extend the model to consider a more general case in which firms have different sizes of nonswitchers. We show that the firm with a larger size of nonswitchers is more willing to provide fit‐revelation sampling if the benefit from dropping low‐value consumers through sampling is large. Targeted sampling and pricing strategies are further examined in this paper. We show that firms always prefer asymmetric sampling strategies when targeting the group of switchers.

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Demonstrations and Price Competition in New Product Release

Cited by 45 publications

References 30 publications

Advance Selling with Part Prepayment and Consumer Returns

Advance Selling with Part Prepayment and Consumer Returns

Presale Strategy for a Dual-Channel Retailer Considering Sales Effort

Competitive fit‐revelation sampling and mixed pricing strategy

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