Retailer's decoy strategy versus consumers' reference price effect in a retailer-Stackelberg supply chain

Yichao Yuan and Tiaojun Xiao

Journal of Retailing and Consumer Services, 2022, vol. 68, issue C

Abstract: Decoy strategy for bundling is an important marketing option because it can reflect the behavior resulting from consumers' reference price effect. This paper develops a game-theoretic model of a dyadic supply chain to study the joint decisions on pricing and decoy strategies in the presence of consumers' reference price effect. The retailer chooses one of the decoy strategies (phantom decoy-mixed bundling, decoy-mixed bundling) and selling prices to maximize her profit. Our study shows that: under both decoy strategies, the retailer and the manufacturer benefit from consumers' low reference price effect; however, the high reference price effect hurts their profits.

Keywords: Consumer behavior; Decoy strategy; Game theory (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joreco:v:68:y:2022:i:c:s0969698922001746

DOI: 10.1016/j.jretconser.2022.103081

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