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1776. Reserved product pricing with dependent and normally distributed reservation prices
Invited abstract in session TB-59: Pricing and Capacity Management, stream Pricing and Revenue Management.
Tuesday, 10:30-12:00Room: S08 (building: 101)
Authors (first author is the speaker)
| 1. | Thomas Archibald
|
| Business School, University of Edinburgh |
Abstract
Reserved product pricing (RPP) is a strategy used by firms selling two (or more) products to consumers. Under this strategy, products are offered for sale individually and consumers who purchase only one of the products is later offered a discount on the other product. Prior analysis has shown that RPP can be more profitable than other bundling strategies under the common assumption of independent and uniformly distributed reservation prices. We use a simulation model to investigate the performance of RPP with more general assumptions about reservation prices. The results show that RPP remains an attractive strategy provided not too many customers anticipate the discount and modify their behaviour to purchase only one product initially. The main finding is that the optimal RPP strategy is relatively robust to the correlation in reservation prices.
Keywords
- Marketing
- Revenue Management and Pricing
- Simulation
Status: accepted
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