Optimal pricing and promotional effort control policies for a new product growth in segmented market

Abstract

Market segmentation enables the marketers to understand and serve the customers more effectively thereby improving company’s competitive position. In this paper, we study the impact of price and promotion efforts on evolution of sales intensity in segmented market to obtain the optimal price and promotion effort policies. Evolution of sales rate for each segment is developed under the assumption that marketer may choose both differentiated as well as mass market promotion effort to influence the uncaptured market potential. An optimal control model is formulated and a solution method using Maximum Principle has been discussed. The model is extended to incorporate budget constraint. Model applicability is illustrated by a numerical example. Since the discrete time data is available, the formulated model is discretized. For solving the discrete model, differential evolution algorithm is used

Understanding multi-stage diffusion process in presence of attrition of potential market and related pricing policy

“…Further, Jha at al. [21] have analyzed the impact of price and promotional efforts on the evolution of sales intensity in the segmented market.…”

“…On integrating the equations (20) and (21) and by utilizing the transversality condition, we get the optimal values of costate variables:…”

Customer Knowledge Enabled Innovation: Analyzing Pricing‐Promotion Coordination Mechanism

“…From the perspective of new product pricing and promotion decision-making research, domestic and foreign research mainly focuses on two aspects. First, research on the optimal pricing and promotion strategies of new products when there are different market segments [8][9][10][11] studied the decision-making of pricing and promotion efforts in a multistage supply chain. Liu et al [12] studied the impact of promotion efforts under dual channels on the profits of manufacturers and retailers and concluded that only synergy between the upstream and downstream of the supply chain can improve promotion efficiency.…”