Retail Price Competition with Product Fit Uncertainty and Assortment Selection

Sun, Haoying; Gilbert, Stephen M.

doi:10.1111/poms.13005

Cited by 32 publications

(31 citation statements)

References 28 publications

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“…Different from the previous research, we consider markets with consumer fit uncertainty, and show that the firms' price dispersion can be attributed to consumer fit uncertainty for products. This study is closely related to Sun and Gilbert (2019). They consider how the equilibrium prices among competing retailers depend upon product assortments when consumers are uncertain about product fit.…”

Section: Literature Reviewsupporting

confidence: 59%

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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Section: Literature Reviewsupporting

confidence: 59%

Competitive fit‐revelation sampling and mixed pricing strategy

Ling-li

Deng

2020

Naval Research Logistics

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“…In addition to private labels, retailers work in collaboration with suppliers to develop an exclusive brand (Hara & Matsubayashi, 2017). An exclusive brand is a brand that is developed by a national brand vendor, often in conjunction with a retailer, and is sold exclusively by the retailer (Sun & Gilbert, 2019). For example, cosmetics powerhouse, Estée Lauder sells two brands of cosmetics and skin care products -American Beauty and Flirt.…”

Section: Differentiation Of Private Labelsmentioning

confidence: 99%

Marketing of Private Labels

Mandal

2021

International Journal of Business Strategy and Automation

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Private labels are developed and sold by retailers and wholesalers. Private labels are gaining in importance and are competing with established brands. Private labels succeed because of certain critical factors. Such brands differentiate themselves and add value so that customers choose such brands over established brands. Companies selling private labels adopt a number of strategies and initiatives to succeed in the competition. The study discusses all these aspects, the reasons for success of private labels, and the measures such brands adopt to achieve business excellence. Academicians and practicing managers will be able to appreciate the importance of and the impact created by private labels. They might suggest effective strategies and initiatives so that customers are delighted by private labels and such brands succeed in the long run.

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“…(3) e demand for products at each price level is independent of each other. As customers have different purchase behaviors [24], i.e., some choose to purchase at the normal price level as they do not want to wait while some choose to wait and buy discount products rather than at the normal price level. ere is a third type who dynamically adjust their purchase behavior according to the retailer's strategy.…”

Section: Problem Description and Hypothesis For Two-level Price-fluctuation Ordering Problemmentioning

confidence: 99%

Research on Two-Level Price-Fluctuation Supply Chain Ordering Strategy Problem

Zheng

Meng

Shen

2020

Discrete Dynamics in Nature and Society

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Uncertainties from retail price-fluctuation sales as well as constraints from suppliers make it difficult for retailers to place accurate orders, which have a great impact on the whole supply chain. Thus, this paper studies a supply chain ordering problem for two-level price-fluctuation sales and establishes a bilevel programming model by Copula function measuring the correlation between price and demand. The optimal order quantity is derived by transforming the bilevel programming model into a single-level model. An algorithm is given for solving the approximate optimal order quantity for the discrete model, and the convergence of the algorithm is proved. The results show that the approximate optimal order quantity decreases with the increase in the uncertainties of price and demand. Supply chain members should sell more products at the normal level, thereby increasing profits of each member in the supply chain under two-level price-fluctuation sales.

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Retail Price Competition with Product Fit Uncertainty and Assortment Selection

Cited by 32 publications

References 28 publications

Competitive fit‐revelation sampling and mixed pricing strategy

Competitive fit‐revelation sampling and mixed pricing strategy

Marketing of Private Labels

Research on Two-Level Price-Fluctuation Supply Chain Ordering Strategy Problem

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