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Bundle pricing strategies for two complementary products with different channel powers

Raghu Nandan Giri (), Shyamal Kumar Mondal () and Manoranjan Maiti ()
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Raghu Nandan Giri: Vidyasagar University
Shyamal Kumar Mondal: Vidyasagar University
Manoranjan Maiti: Vidyasagar University

Annals of Operations Research, 2020, vol. 287, issue 2, No 8, 725 pages

Abstract: Abstract In this paper, we consider a duopoly market where two manufacturers separately produce and sell two complementary products through a common retailer as a leader–follower movement. The competition has been studied in two-echelon supply chain system and all produced products are sold by the retailer with individual product prices or with pure products’ bundling price in the non-cooperative market. The demand of each product linearly depends on prices of these two products as per their nature. Here, model for two different cases (without and with pure products’ bundling) are developed mathematically to maximize the profit of each participant of the supply chain and then corresponding optimal pricing strategies are worked out for the manufacturers and retailer. It is shown that supply chain profit for the pure bundling is better than the profit when products are sold at individual prices. Finally, the model is illustrated with numerical data to study the effects of models’ parameters in the pricing strategies and some marketing decisions are explored.

Keywords: Supply chain management; Complementary products; Products bundle; Stackelberg game; Pricing strategy (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10479-017-2632-y

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