Managing Price Promotions Within a Product Line

Maxim Sinitsyn

Marketing Science, 2016, vol. 35, issue 2, 304-318

Abstract: In this paper, I investigate the question of how a firm producing substitutes should coordinate price promotions of these products. I model price competition between two firms, each producing two products that are horizontally differentiated with respect to some characteristic. Consumers are divided into loyals, who always purchase their preferred product, and switchers, who have heterogeneous preferences for the four products. If consumers substitute easily between the products produced by one firm, the firms promote one product at a time to avoid cannibalization. If consumers mainly substitute between the products with the same characteristic, the firms often employ joint promotions with at least one product at a deep discount. If, at the same time, consumers easily substitute to the products in other categories, the firms use joint promotions less often and avoid simultaneous deep discounts.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2015.0938 .

Keywords: pricing; price promotions; product line; consumer heterogeneity; mixed strategies (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.2015.0938 (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:35:y:2016:i:2:p:304-318

Access Statistics for this article

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