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Pricing with Prescheduled Sales

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  • Maxim Sinitsyn

    (Department of Economics, University of California, San Diego, La Jolla, California 92093)

Abstract

In this paper, I introduce a framework of price promotions by firms that preschedule their sale dates. I set up a dynamic model of demand accumulation in which high- and low-valuation consumers enter the market every period. The high-valuation consumers buy immediately and leave the market; the low-valuation consumers accumulate while waiting for the sale price. The firms schedule the dates of their promotions in advance. I find that often they use mixed strategies, choosing the future promotion period according to a probability distribution function. If the firms can cancel their prescheduled sales, typically they can wait longer until holding sales by shifting the probability distribution towards later periods. Scheduling promotions in advance increases the firms’ profits in comparison to the case when the promotion decision is made in the period when the promotion is offered.

Suggested Citation

  • Maxim Sinitsyn, 2017. "Pricing with Prescheduled Sales," Marketing Science, INFORMS, vol. 36(6), pages 999-1014, November.
    • Handle: RePEc:inm:ormksc:v:36:y:2017:i:6:p:999-1014
    DOI: 10.1287/mksc.2017.1052
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    References listed on IDEAS

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    Cited by:

    1. Sharan Jagpal & Feihong Xia, 2019. "Coordinating Marketing and Production with Asymmetric Costs: Theory and Estimation," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 6(1), pages 1-12, June.
    2. Hao Lan & Tim Lloyd & Wyn Morgan & Paul W. Dobson, 2022. "Are food price promotions predictable? The hazard function of supermarket discounts," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 64-85, February.
    3. Sinitsyn, Maxim, 2022. "Price leadership with promotions," International Journal of Industrial Organization, Elsevier, vol. 82(C).

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