The loss leader is a turkey: Targeted discounts from multi-product competitors

DeGraba, Patrick

doi:10.1016/j.ijindorg.2005.08.013

Cited by 48 publications

(29 citation statements)

References 20 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Grubb (2009Grubb ( , 2015 considers consumers with behavioral biases in the mobile-phone-service market (discussed later). DeGraba (2006) and Beard and Stern (2008) focus on the role of consumer heterogeneity (absent from my model) without bounded rationality and show how loss leading can help attract high-value customers. The predictions of these models are different from mine because in them loss leaders are targeted only toward a subset of consumers whereas in my model the most natural loss leaders are staple goods that all consumers buy.…”

mentioning

confidence: 99%

Unplanned Purchases and Retail Competition

Johnson

2017

American Economic Review

View full text Add to dashboard Cite

I propose a framework in which asymmetric multiproduct retailers compete for one-stop shoppers who have biased beliefs about their future purchase probabilities (and so make unplanned purchases). One firm carries a full portfolio of products while the other carries an incomplete but endogenous one. Using this framework, I examine the phenomenon of loss leading, the optimal product portfolio of the smaller firm, and the effects of banning loss leading. Among other results, I show that there is a nonpredatory (and possibly procompetitive) justification for the observation that such larger firms may charge below cost on the core product lines of their smaller rivals. (JEL D11, D21, D83, L13, L25, L71, L81)

show abstract

mentioning

confidence: 99%

Unplanned Purchases and Retail Competition

Johnson

2017

American Economic Review

View full text Add to dashboard Cite

show abstract

“…28 Lemma 1 With perfect availability the monopolist cannot extract more than v 1 from the consumers.…”

Section: Close Substitutesmentioning

confidence: 99%

Selling substitute goods to loss‐averse consumers: limited availability, bargains, and rip‐offs

Rosato

2016

The RAND J of Economics

View full text Add to dashboard Cite

Why are some sale items subject to limited availability while other substitute items are available in large quantities and are priced relatively high at the same point in time? Can such a retail strategy lure consumers into purchasing the more expensive item? This paper characterizes the pro…t-maximizing pricing and product-availability strategies for a retailer selling two substitute goods to loss-averse consumers and shows that limited-availability sales can manipulate consumers into an ex-ante unfavorable purchase. Consumers have unit demand, are interested in buying only one good, and their reference point is given by their recent rational expectations about what consumption value they would receive and what price they would pay. The seller maximizes pro…ts by raising the consumers'reference point through a tempting discount on a good available only in limited supply (the bargain) and cashing in with a high price on the other good (the rip-o¤), which the consumers buy if the bargain is not available to minimize their disappointment. The seller might prefer to o¤er a deal on the more valuable product, using it as a bait, because consumers feel a larger loss, in terms of forgone consumption, if this item is not available. I also show that the bargain item can be a loss leader, that the seller's product line is not welfare-maximizing and that she might supply a socially wasteful product. The model suggests that the current FTC Guides Against Bait Advertising, by allowing retailers to employ limited-availability sales, could reduce consumer and social welfare.JEL classi…cation: D11; D42; L11.

show abstract

“…As classificações de objetivos de preço apresentados acima, não obstante a complexidade das decisões de precificação, impõem a necessidade de perseguir mais de um objetivo por vez (OXENFELDT, 1983;DIAMANTOPOULOS, 1991;SMITH, 1995;JAIN, 2004). Além disso, nem todos os objetivos são compatíveis entre si, por exemplo, maximização das vendas pode levar a menores margens de lucro (KEIL, REIBSTEIN, WITTINK, 2001), enquanto uma ênfase excessiva nos lucros poderia ser contrastante com a obtenção de objetivos sociais.…”

Section: Objetivos De Preço Qualitativosunclassified

“…Autores como Diamantopoulos (1991), Indounas e Avlonitis (2009), Marn e Rosiello (1992), Simon (1992), Shipley e Jobber (2001) e Taher e Basha (2006) sinalizam a importância das decisões de preço para a lucratividade e sobrevivência de cada empresa no longo prazo. Marn e Rosiello (1992), Simon (1992) e Shipley e Jobber (2001) indicam que a precificação é o único elemento do composto de marketing que produz renda para a organização, enquanto os outros componentes estão relacionados às despesas.…”

Section: Introductionunclassified

Objetivos e métodos de preço no varejo: estudo na zona sul de São Paulo

2012

View full text Add to dashboard Cite

No varejo existe uma complexa tarefa na formulação das estratégias de precificação. Enquanto os objetivos de preço fornecem uma direção geral para ação, os mé-todos de precificação são procedimentos pelos quais as organizações atingem suas decisões de preços. O escopo deste trabalho é explorar os objetivos de preços do varejo juntamente com os métodos que adota para precificar, investigando se os objetivos estão associados aos métodos. A pesquisa mostra que as empresas da amostra estão fundamentalmente perseguindo objetivos quantitativos em vez de qualitativos, com uma forte ênfase na realização de vendas e lucros, seguido pelo desenvolvimento de mercado. Outro ponto relevante na discussão das estratégias de varejo: as empresas da amostra parecem dar menor importância a métodos de orientação ao cliente e empregam com mais frequência o método tradicional de custos. Abstract Retailers face a complex task in formulating prices strategies. While the goal of pricing is to lay down a general course of action, pricing methods are procedures which enable organizations to make their pricing decisions. The scope of this paper is to explore retail pricing goals along with the methods that are employed for pricing, and to investigate whether the methods employed succeed in achieving the objectives. It was found that the companies used in the sample are basically pursuing quantitative rather than qualitative objectives and that they lay emphasis on achieving sales and making profits by following market developments. Another significant factor was that, the firms in the sample seemed to attach less importance to customer-oriented methods and employ the traditional methods of costing, probably due to their simplicity.

show abstract

The loss leader is a turkey: Targeted discounts from multi-product competitors

Cited by 48 publications

References 20 publications

Unplanned Purchases and Retail Competition

Unplanned Purchases and Retail Competition

Selling substitute goods to loss‐averse consumers: limited availability, bargains, and rip‐offs

Objetivos e métodos de preço no varejo: estudo na zona sul de São Paulo

Contact Info

Product

Resources

About