Dynamic pricing of fashion-like multiproducts with customers' reference effect and limited memory
type: Item
instance of: scholarly article
title: Dynamic pricing of fashion-like multiproducts with customers' reference effect and limited memory
zbMATH Open document ID: 1407.91116
DOI: 10.1155/2014/157865
author: Mengqi Liu
author: Wenjie Bi
author: Guo Li
author: Xiaohong Chen
published in: Mathematical Problems in Engineering
publication date: 2019-02-08T00:00:00Z
review text: Summary: We study a fashion retailer's dynamic pricing problem in which consumers present reference effect and memory window. Based on the theory of Baucells et al. (2011), we propose a new reference-price updating mechanism in fashion and textile (FT) industry where consumers have a bounded memory window and anchor on the first and most recent price in any memory window. Moreover, we study the impacts of this mechanism on optimal pricing policy for a retailer selling multiple fashion-like products and analyze optimal price's steady state, monotonicity, and convergence. For two-product case, we find that, for otherwise identical products, the steady-state price of a core product is lower than that of a noncore product. We compute the retailer's loss of revenue if he incorrectly assumes the reference-price effect to be at the product level and prices the products individually. Further, as illustrated with numerical results, our model is a flexible way to make pricing strategy if the retailer can anticipate the length of consumers' memory window.
Mathematics Subject Classification ID: 91B24
Mathematics Subject Classification ID: 91B42
Mathematics Subject Classification ID: 90B50
zbMATH DE Number: 7015812
describes a project that uses: CompEcon
MaRDI profile type: Publication
full work available at URL: https://doi.org/10.1155/2014/157865
OpenAlex ID: W1985797657
Wikidata QID: Q59063337
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description: scientific article; zbMATH DE number 7015812