—This paper investigates the sale strategy problem
for a manufacturer, who directly sells differentiated products to
consumers. Two type of substitutable products characterized by
different performance and prices can be sold in the same sale
period or one after another. Assume consumers’ values to two
types of products are discounted when they are available at the
same time. Whereas, when the type of products that a consumer
wants is not available, the consumer may leave and buy
substitutable products sold by other retailers. Numerical study
is used to evaluate the impact of several parameters and sale
strategies on the profit of the manufacturer. I observe that, if
the parameters can be arbitrarily adjusted, all the sale
strategies can be the best strategy. Particularly, the
manufacture should give priority to products with higher
consumer leaving rate and higher discount rate in considering
when to sell substitutable products.
—Choice behavior, pricing, product
substitutability, product variety.
W. G. Zhou is with the School of Mathematics and Computer Science,
Hubei University of Arts and Science, Xiangyang 441053, Hubei, China
Cite: Sale Strategy of Substitutable Products under Consumer
Choice, "Sale Strategy of Substitutable Products under Consumer
Choice," International Journal of Modeling and Optimization vol. 4, no. 6, pp. 499-503, 2014.