2541. On the antagonistic and synergistic relationship between price promotions and safety stock
Invited abstract in session MD-29: Product, Pricing, and Channel Strategies under Market Uncertainty, stream Pricing and Revenue Management Innovations.
Monday, 14:30-16:00Room: Maurice Keyworth 1.04
Authors (first author is the speaker)
| 1. | Andreas Soteriou
|
| Business Administration, University of Cyprus | |
| 2. | George Hadjinicola
|
| University of Cyprus | |
| 3. | Nyoman Pujawan
|
| Sepuluh Nopember Institute of Technology | |
| 4. | Arnaud Lacheret
|
| SKEMA Business School - Campus Grand Paris |
Abstract
In today’s competitive markets, well-structured operations and supply chains are recognized for their impact on organizational performance. Scholars and practitioners are moving beyond cost-focused views, while real-time data analytics present new challenges and opportunities. Meanwhile, marketing efforts adapt to shorter product life cycles and changing consumer behavior, aiming to enhance value propositions. However, these efforts often operate separately from operations. While the need for marketing-operations coordination is well known, research increasingly emphasizes a deeper integration of these functions.
This paper examines price promotions and their relationship with operational factors. We propose a framework capturing the interplay between price promotions and factors like safety stocks, service levels, inventory costs, and lead time. The framework assumes that higher safety stocks and service levels drive sales growth. The framework can help managers determine when increased safety stocks can replace or complement price promotions in driving sales. When should firms rely on safety stocks, promotions, or a combination of the two? Our work highlights the conflicting and complementary roles of marketing and operations in leveraging price promotions and safety stocks and identifies both the antagonistic and synergistic relationship of the marketing and operations functions, through price promotions and safety stocks, respectively.
Keywords
- Revenue Management and Pricing
- Marketing
- Inventory
Status: accepted
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