Pricing Strategy for New Products with Presales

An increasing number of firms and retailers use presale strategies to induce customers to purchase before new products enter the market to increase their market share. Presales have gradually become a hot issue in business and academic circles. Based on a skimming pricing strategy and a penetration...

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Bibliographic Details
Published in:Mathematical problems in engineering 2019, Vol.2019 (2019), p.1-13
Main Authors: Liu, Jiqiong, Yang, Aifeng, Hu, Xiaojian, Feng, Shuai
Format: Article
Language:English
Subjects:
Consumers
Discount department stores
Engineering
Market shares
Market strategy
Penetration
Pricing
Pricing policies
Profitability
Skimming
Strategy
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Summary:An increasing number of firms and retailers use presale strategies to induce customers to purchase before new products enter the market to increase their market share. Presales have gradually become a hot issue in business and academic circles. Based on a skimming pricing strategy and a penetration pricing strategy, this paper uses the different choice behaviors of two types of consumers to investigate the pricing strategy of preselling new products. The results show that if the proportion of fashion consumers is relatively low and their willingness to buy in the spot channel is below the threshold, the retailer should focus on traditional consumers by using a skimming pricing strategy; otherwise, the retailer should switch to a penetration pricing strategy. Moreover, we find that to gain more profits, the retailer should introduce a presale channel using either a penetration pricing or skimming pricing strategy. The introduction of a presale channel may not only reduce inventory risk and cost and enhance the market share and profitability of the enterprise but also help consumers avoid the risk of shortage and enhance their sense of security.
ISSN:1024-123X
1563-5147
DOI:10.1155/2019/1287968