Dynamic pricing of differentiated products under competition with reference

price effects using a neural network-based approach

Published: 15 December 2023

Famil Alamdar, P., Seifi, A.

Customers learn from the past prices of retailers and form their estimate of sales prices, called
the reference price effect, and use it to make a decision on choosing a retailer to make a
purchase. The demand is uncertain, and the customer choice behavior is modeled based on a
Multinomial Logit model, modified to incorporate the reference effect. Therefore, we have used a
neural network-based algorithm called Revenue-Based Neural Network (RBNN) to dynamically
calculate the competitive price in order to increase the retailer’s revenue. The results of the
experiments show that the pricing policy under duopolistic conditions highly affects the income
of retailers in the presence of reference price. By charging higher prices in the RBNN strategy,
the seller trades off the current revenue with the long-term revenue resulting from formation of
higher levels of the reference price in customers’ minds and earns more revenue than its
competitor overall.

Famil Alamdar, P., Seifi, A. Dynamic pricing of differentiated products under competition with
reference price effects using a neural network-based approach. J Revenue Pricing Manag 23,
575–587 (2024). https://doi.org/10.1057/s41272-023-00444-8

Price promotion optimization model for multiperiod planning: a case study

Published: 17 August 2023

Phumchusri, N., Chewcharat, T. & Kanokpongsakorn, S.

Pricing strategy is vital in the retail sector as prices play an important role in driving revenues
and profits. However, few studies have been conducted on retail promotion optimization,
particularly amid the COVID-19 situation. This study aims to leverage statistical models to
examine the effects of price promotion and other factors on sales during the COVID-19 period.
This study aims to leverage statistical models to examine the effects of price promotion and
other factors on sales during the COVID-19 period. In addition, an optimization model is
proposed to maximize the profitability of a retail store through strategies for optimal promotional
pricing. In this study, monthly sales data in four product categories with 245 stock keeping units
from July 2020 to June 2022 from a case study convenience store chain were retrieved and
preprocessed. Subsequently, statistical models, such as the autoregressive distributed lag
model OWN and the autoregressive distributed lag model CROSS, were implemented to
examine the effects of price, promotion and other factors on sales.
Phumchusri, N., Chewcharat, T. & Kanokpongsakorn, S. Price promotion optimization model for
multiperiod planning: a case study of beauty category products sold in a convenience store
chain. J Revenue Pricing Manag 23, 164–178 (2024).
https://doi.org/10.1057/s41272-023-00438-6

Evaluating promotional pricing effectiveness using convenience store daily

Published: 23 November 2022

Phumchusri, N., Kosawanitchakarn, W., Chawanapranee, S. et al.

One of the activities that can grab customers attention and rise sales for convenience stores is
promotional pricing strategy. Our study aims to examine the effects of promotional pricing and
other factors on sales. Six categories of products with 286 SKUs are explored. Four models are
compared, and the results show that autoregressive-distributed lag model provides the lowest
mean absolute percentage error (MAPE). This model can also capture the interaction between
promotion and non-promotion products. Price elasticity of each product is found to be different,
and it results different optimal prices for the maximum profit. Moreover, factors like holidays, the
beginning of the month, or weekend, can uplift sales at a specific time.

Phumchusri, N., Kosawanitchakarn, W., Chawanapranee, S. et al. Evaluating promotional

The Rational Effect of Price Promotions on Sales and Consumption

João L. Assunção and Robert J. Meyer

We explore the rational effect of price variation on sales and consumption in markets where
consumers are uncertain about the future price of goods. We first derive an optimal ordering
policy which expresses the amount a consumer should purchase and consume in a given period
as a function of the observed price of the good, the distribution of future prices, and the nature
of his or her inventory. This policy extends previous normative models of inventory control, such
as those by Golabi (1985) and Kalymon (1970) to the case where the amount to consume in a
given period is an explicit decision variable and prices follow a first-order stochastic process. We
then use this model to explore how changes in the long-run frequency and temporal correlations
of price promotions should normatively affect the contemporaneous relationship between
purchase, consumption and price. Among the predictions which follow from the model are that
consumption should rationally increase with the size of existing inventories, the short-term
sensitivity of sales to prices should be greater than that of consumption to price, and this
discrepancy increases with decreases in the temporal correlation of price deals and the
long-term relative frequency of price deals.

Assunção, João L., and Robert J. Meyer. “The Rational Effect of Price Promotions on Sales and
Consumption.” Management Science, vol. 39, no. 5, 1993, pp. 517–35. JSTOR,
http://www.jstor.org/stable/2632592. Accessed 2 Dec. 2024.

Contraceptive Price Changes: The Impact on Sales in Bangladesh

Robert L. Ciszewski, Philip D. Harvey

In April 1990, the Bangladesh social marketing project increased the prices of the
contraceptives it sold by an average of about 60%. In the year following these increases,
condom sales dropped by 29%, and pill sales fell by 12%, despite a well-established trend of
annual increases. When sales had not returned to their previous levels after about two years,
the project lowered prices; sales returned to earlier levels within a few months and have
increased since. These events occurred in a large and mature program, where major variables
affecting project performance are well understood. Therefore, the results appear to constitute
strong evidence that, at least in social marketing structures, contraceptive prices, and changes
in those prices, have a substantial impact on demand.

Ciszewski, Robert L., and Philip D. Harvey. “Contraceptive Price Changes: The Impact on Sales
in Bangladesh.” International Family Planning Perspectives, vol. 21, no. 4, 1995, pp. 150–54.
JSTOR, https://doi.org/10.2307/2133322. Accessed 2 Dec. 2024.

Quantitative Study on Pricing Strategy of Asian grocery stores in Dublin

Divya Deepak Gole

There is significant importance to prices in the retail industry, as the demand from consumers
increases then prices for products are also altered or increase in order to increase sale.
Customer satisfaction is also main concern for grocery stores; thus, there has been earlier
literature based on this research work.

Gole, D. D. (2019). Quantitative Study on Pricing Strategy of Asian grocery stores in Dublin and
their effects on Customer Segmentation due to increase in demand. Dublin, National College of
Ireland.
https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q