Pricing Strategy for New Products with Presales

Abstract

An increasing number of firms and retailers use presale strategies to induce customers to purchase before new products enter the market to increase their market share. Presales have gradually become a hot issue in business and academic circles. Based on a skimming pricing strategy and a penetration pricing strategy, this paper uses the different choice behaviors of two types of consumers to investigate the pricing strategy of preselling new products. The results show that if the proportion of fashion consumers is relatively low and their willingness to buy in the spot channel is below the threshold, the retailer should focus on traditional consumers by using a skimming pricing strategy; otherwise, the retailer should switch to a penetration pricing strategy. Moreover, we find that to gain more profits, the retailer should introduce a presale channel using either a penetration pricing or skimming pricing strategy. The introduction of a presale channel may not only reduce inventory risk and cost and enhance the market share and profitability of the enterprise but also help consumers avoid the risk of shortage and enhance their sense of security.

Return Mode Selection and Pricing Strategy for a Dual-Channel Retailer

“…e results showed that for a DCR, the best brand strategy is to adopt as many brand differences as possible between the online and offline stores, especially when consumers are less price sensitive and the market base is larger. With an increasing number of retailers adopting dual channels, scholars have deeply investigated the decisionmaking issues facing DCRs from different perspectives, including competitive pricing [66][67][68][69], channel conflicts and coordination [70][71][72], and channel strategy [73][74][75]. In addition, some scholars have studied the business strategies of DCRs, such as the POPU (preorder-online, pickup-instore) strategy.…”

Presale Strategy for a Dual-Channel Retailer Considering Sales Effort

“…Through the implementation of the presale strategy, the seller can identify the segment of consumers who are willing to pay a premium for early delivery and the segment of consumers who choose to wait for a low price but may face shortage risk; then, the seller can formulate a differential pricing strategy to maximize sales. In addition, the presale strategy can allow the seller to secure some revenue in advance [8], reducing the possibility of other problems caused by a shortage of funds. Furthermore, the presale strategy can be combined with ordering strategy [1], innovation strategy [9] and refund strategy [10,11] to support the operations of enterprises and improve their competitiveness.…”

“…In the presence of a presale option, whether strategic consumers accept the seller's presale strategy depends on the net utility obtained from the purchase of presale products. Following Feng, et al [8], we define the net utility that a consumer derives from purchasing a product (including presale and spot sale) as the valuation of the product minus the costs paid for the product, including prices and other opportunity costs. However, unlike Feng, et al [8], we find that the net utility a consumer obtains from purchasing a product is also related to the seller's sales efforts.…”

“…Following Feng, et al [8], we define the net utility that a consumer derives from purchasing a product (including presale and spot sale) as the valuation of the product minus the costs paid for the product, including prices and other opportunity costs. However, unlike Feng, et al [8], we find that the net utility a consumer obtains from purchasing a product is also related to the seller's sales efforts. These sales efforts refer to a series of measures taken by the seller to encourage consumers to buy to increase sales.…”

“…In this paper, we study the presale problem of a dualchannel retailer in a framework similar to Feng, et al [8] and consider the impact of the retailer's offline sales effort on strategic consumers' choices. We first discuss the effect of the retailer's sales effort level on consumers' purchase decisions when the retailer does not provide presales and then determine the corresponding optimal pricing strategy and sales effort level.…”