—An Assortmentwide Decision-Support System for Dynamic Pricing and Promotion Planning in DIY Retailing

Martin Natter (), Thomas Reutterer (), Andreas Mild () and Alfred Taudes ()
Additional contact information
Martin Natter: Johann Wolfgang Goethe-University Frankfurt, Mertonstr. 17, D-60054 Frankfurt/Main, Germany
Thomas Reutterer: Vienna University of Economics and Business Administration, Augasse 2-6, A-1090 Vienna, Austria
Andreas Mild: Vienna University of Economics and Business Administration, Nordbergstr. 15, A-1090 Vienna, Austria
Alfred Taudes: Vienna University of Economics and Business Administration, Nordbergstr. 15, A-1090 Vienna, Austria

Marketing Science, 2007, vol. 26, issue 4, 576-583

Abstract: The main objective of this report is to describe a decision-support system for dynamic retail pricing and promotion planning. Our weekly demand model incorporates price, reference price effects, seasonality, article availability information, features, and discounts. Building on previous research, we quantify demand interdependencies and integrate the resulting profit-lifting effects into the optimal pricing model. The methodology was developed and implemented at bauMax, an Austrian do-it-yourself retailer. Along with the practical requirements, an objective function was employed that can be used as a vehicle for implementing a retailer's strategy. Eight pricing rounds with thousands of different stock-keeping units have each served as a testing ground for our approach. Based on various benchmarking methods, a positive impact on profit was reported. The currently implemented marketing decision-support system increased gross profit on average by 8.1 and sales by 2.1%.

Keywords: reference price; demand interdependency; revenue management; retail strategy; pricing research; dynamic pricing (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.1060.0217 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:26:y:2007:i:4:p:576-583

Access Statistics for this article

More articles in Marketing Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().