IDEAS home Printed from
   My bibliography  Save this article

Optimizing online recurring promotions for dual-channel retailers: Segmented markets with multiple objectives


  • Jiang, Yuanchun
  • Liu, Yezheng
  • Shang, Jennifer
  • Yildirim, Pinar
  • Zhang, Qingfu


Online promotion helps enhance brand awareness and boost sales. Although it attracts customer traffic, an ill-conceived price promotion has serious repercussions because it disproportionately draws bargain hunters, results in profit erosion and causes operational chaos due to erratic demands. This research proposes a long-term optimization model to help dual channel (click-and-mortar) retailers understand the conditions necessary to promote products online across all markets. When partial markets are recommended, we investigate how to price and select the market portfolio for promotion in each time period. We develop a multi-objective evolutionary algorithm to efficiently solve complex and large-scale problems. Both theoretical analysis and numerical study show that the proposed model outperforms the conventional strategy of promoting online across the board.

Suggested Citation

  • Jiang, Yuanchun & Liu, Yezheng & Shang, Jennifer & Yildirim, Pinar & Zhang, Qingfu, 2018. "Optimizing online recurring promotions for dual-channel retailers: Segmented markets with multiple objectives," European Journal of Operational Research, Elsevier, vol. 267(2), pages 612-627.
  • Handle: RePEc:eee:ejores:v:267:y:2018:i:2:p:612-627
    DOI: 10.1016/j.ejor.2017.11.059

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL:
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Yuan, Hong & Krishna, Aradhna, 2008. "Pricing of mall services in the presence of sales leakage," Journal of Retailing, Elsevier, vol. 84(1), pages 95-117.
    2. Bart J. Bronnenberg & Vijay Mahajan, 2001. "Unobserved Retailer Behavior in Multimarket Data: Joint Spatial Dependence in Market Shares and Promotion Variables," Marketing Science, INFORMS, vol. 20(3), pages 284-299, October.
    3. Yue, Xiaohang & Liu, John, 2006. "Demand forecast sharing in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 174(1), pages 646-667, October.
    4. repec:spr:compst:v:51:y:2000:i:3:p:479-494 is not listed on IDEAS
    5. Benjamin Edelman & Sonia Jaffe & Scott Duke Kominers, 2016. "To Groupon or not to Groupon: The profitability of deep discounts," Marketing Letters, Springer, vol. 27(1), pages 39-53, March.
    6. Mei Xue & Lorin M. Hitt & Patrick T. Harker, 2007. "Customer Efficiency, Channel Usage, and Firm Performance in Retail Banking," Manufacturing & Service Operations Management, INFORMS, vol. 9(4), pages 535-558, April.
    7. Xuanming Su, 2007. "Intertemporal Pricing with Strategic Customer Behavior," Management Science, INFORMS, vol. 53(5), pages 726-741, May.
    8. Zhou, Yong-Wu & Cao, Bin & Tang, Qinshen & Zhou, Wenhui, 2017. "Pricing and rebate strategies for an e-shop with a cashback website," European Journal of Operational Research, Elsevier, vol. 262(1), pages 108-122.
    9. Liu, Yong & Qin, Fei & Fry, Michael J. & Raturi, Amitabh S., 2012. "Multi-period modeling of two-way price commitment under price-dependent demand," European Journal of Operational Research, Elsevier, vol. 221(3), pages 546-556.
    10. Yuanchun Jiang & Jennifer Shang & Chris F. Kemerer & Yezheng Liu, 2011. "Optimizing E-tailer Profits and Customer Savings: Pricing Multistage Customized Online Bundles," Marketing Science, INFORMS, vol. 30(4), pages 737-752, July.
    11. D. Debels & M. Vanhoucke, 2005. "A Decomposition-Based Heuristic For The Resource-Constrained Project Scheduling Problem," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/293, Ghent University, Faculty of Economics and Business Administration.
    12. Chris Forman & Anindya Ghose & Avi Goldfarb, 2009. "Competition Between Local and Electronic Markets: How the Benefit of Buying Online Depends on Where You Live," Management Science, INFORMS, vol. 55(1), pages 47-57, January.
    13. Krishnan Anand & Ravi Anupindi & Yehuda Bassok, 2008. "Strategic Inventories in Vertical Contracts," Management Science, INFORMS, vol. 54(10), pages 1792-1804, October.
    14. Wang, Rui & Purshouse, Robin C. & Fleming, Peter J., 2015. "Preference-inspired co-evolutionary algorithms using weight vectors," European Journal of Operational Research, Elsevier, vol. 243(2), pages 423-441.
    15. Raza, Syed Asif & Turiac, Mihaela, 2016. "Joint optimal determination of process mean, production quantity, pricing, and market segmentation with demand leakage," European Journal of Operational Research, Elsevier, vol. 249(1), pages 312-326.
    16. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    17. Arun Sundararajan, 2004. "Nonlinear Pricing of Information Goods," Management Science, INFORMS, vol. 50(12), pages 1660-1673, December.
    18. Lei, Yu & Gong, Maoguo & Zhang, Jun & Li, Wei & Jiao, Licheng, 2014. "Resource allocation model and double-sphere crowding distance for evolutionary multi-objective optimization," European Journal of Operational Research, Elsevier, vol. 234(1), pages 197-208.
    19. Xiao, Jing & Wu, Zhou & Hong, Xi-Xi & Tang, Jian-Chao & Tang, Yong, 2016. "Integration of electromagnetism with multi-objective evolutionary algorithms for RCPSP," European Journal of Operational Research, Elsevier, vol. 251(1), pages 22-35.
    20. Lemmens, A. & Croux, C. & Stremersch, S., 2012. "Dynamics in international market segmentation of new product growth," Other publications TiSEM 306086bd-670f-48d2-97d1-3, Tilburg University, School of Economics and Management.
    21. Tammy Drezner & Zvi Drezner & Shogo Shiode, 2002. "A Threshold‐Satisfying Competitive Location Model," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 287-299, May.
    22. Zhang, Michael & Bell, Peter C., 2007. "The effect of market segmentation with demand leakage between market segments on a firm's price and inventory decisions," European Journal of Operational Research, Elsevier, vol. 182(2), pages 738-754, October.
    23. Su, Meng & Zheng, Xiaona & Sun, Luping, 2014. "Coupon Trading and its Impacts on Consumer Purchase and Firm Profits," Journal of Retailing, Elsevier, vol. 90(1), pages 40-61.
    24. Lu, Qihui & Shi, Victor & Huang, Jiazhou, 2018. "Who benefit from agency model: A strategic analysis of pricing models in distribution channels of physical books and e-books," European Journal of Operational Research, Elsevier, vol. 264(3), pages 1074-1091.
    25. Nicholas C. Petruzzi & Maqbool Dada, 1999. "Pricing and the Newsvendor Problem: A Review with Extensions," Operations Research, INFORMS, vol. 47(2), pages 183-194, April.
    26. Lemmens, Aurélie & Croux, Christophe & Stremersch, Stefan, 2012. "Dynamics in the international market segmentation of new product growth," International Journal of Research in Marketing, Elsevier, vol. 29(1), pages 81-92.
    27. B.C. Giri & S. Bardhan & T. Maiti, 2016. "Coordinating a three-layer supply chain with uncertain demand and random yield," International Journal of Production Research, Taylor & Francis Journals, vol. 54(8), pages 2499-2518, April.
    28. Christian Borgs & Ozan Candogan & Jennifer Chayes & Ilan Lobel & Hamid Nazerzadeh, 2014. "Optimal Multiperiod Pricing with Service Guarantees," Management Science, INFORMS, vol. 60(7), pages 1792-1811, July.
    29. Vidyanand Choudhary, 2010. "Use of Pricing Schemes for Differentiating Information Goods," Information Systems Research, INFORMS, vol. 21(1), pages 78-92, March.
    30. R. Venkatesh & Wagner Kamakura, 2003. "Optimal Bundling and Pricing under a Monopoly: Contrasting Complements and Substitutes from Independently Valued Products," The Journal of Business, University of Chicago Press, vol. 76(2), pages 211-232, April.
    31. Daniel Serra & Charles Revelle & Ken Rosing, 1999. "Surviving in a competitive spatial market: The threshold capture model," Economics Working Papers 359, Department of Economics and Business, Universitat Pompeu Fabra.
    32. Chen, Bintong & Chen, Jing, 2017. "When to introduce an online channel, and offer money back guarantees and personalized pricing?," European Journal of Operational Research, Elsevier, vol. 257(2), pages 614-624.
    33. Tatsiana Levina & Yuri Levin & Jeff McGill & Mikhail Nediak, 2009. "Dynamic Pricing with Online Learning and Strategic Consumers: An Application of the Aggregating Algorithm," Operations Research, INFORMS, vol. 57(2), pages 327-341, April.
    34. Tianhu Deng & Zuo-Jun Max Shen & J. George Shanthikumar, 2014. "Statistical Learning of Service-Dependent Demand in a Multiperiod Newsvendor Setting," Operations Research, INFORMS, vol. 62(5), pages 1064-1076, October.
    35. Bhattacharjee, Sudip & Ramesh, R., 2000. "A multi-period profit maximizing model for retail supply chain management: An integration of demand and supply-side mechanisms," European Journal of Operational Research, Elsevier, vol. 122(3), pages 584-601, May.
    36. Dieter Debels & Mario Vanhoucke, 2007. "A Decomposition-Based Genetic Algorithm for the Resource-Constrained Project-Scheduling Problem," Operations Research, INFORMS, vol. 55(3), pages 457-469, June.
    37. Jörg Fliege & Benar Fux Svaiter, 2000. "Steepest descent methods for multicriteria optimization," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 51(3), pages 479-494, August.
    38. S. Sriram & Manohar U. Kalwani, 2007. "Optimal Advertising and Promotion Budgets in Dynamic Markets with Brand Equity as a Mediating Variable," Management Science, INFORMS, vol. 53(1), pages 46-60, January.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Qifan Hu & Bing Xu, 2019. "Differential Game Analysis of Optimal Strategies and Cooperation in Omni-Channel Organic Agricultural Supply Chain," Sustainability, MDPI, Open Access Journal, vol. 11(3), pages 1-34, February.
    2. Liu, Weihua & Yan, Xiaoyu & Wei, Wanying & Xie, Dong, 2019. "Pricing decisions for service platform with provider’s threshold participating quantity, value-added service and matching ability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 410-432.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guo Li & Hong Zheng & Mengqi Liu, 2020. "Reselling or drop shipping: Strategic analysis of E-commerce dual-channel structures," Electronic Commerce Research, Springer, vol. 20(3), pages 475-508, September.
    2. Li, Dan & Chen, Jing & Liao, Yi, 2021. "Optimal decisions on prices, order quantities, and returns policies in a supply chain with two-period selling," European Journal of Operational Research, Elsevier, vol. 290(3), pages 1063-1082.
    3. Nishtha Langer & Chris Forman & Sunder Kekre & Baohong Sun, 2012. "Ushering Buyers into Electronic Channels: An Empirical Analysis," Information Systems Research, INFORMS, vol. 23(4), pages 1212-1231, December.
    4. Steel, Will & Daglish, Toby & Marriott, Lisa & Gemmell, Norman & Howell, Bronwyn, 2013. "E-Commerce and its effect upon the Retail Industry and Government Revenue," Working Paper Series 4333, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    5. Pradeep K. Chintagunta & Junhong Chu, 2021. "Geography as branding: Descriptive evidence from Taobao," Quantitative Marketing and Economics (QME), Springer, vol. 19(1), pages 53-92, March.
    6. Legros, Patrick & Stahl, Konrad O, 2019. "Local Search Markets and External Competition," CEPR Discussion Papers 13764, C.E.P.R. Discussion Papers.
    7. Tang, Christopher S., 2010. "A review of marketing-operations interface models: From co-existence to coordination and collaboration," International Journal of Production Economics, Elsevier, vol. 125(1), pages 22-40, May.
    8. Modak, Nikunja Mohan & Kelle, Peter, 2019. "Managing a dual-channel supply chain under price and delivery-time dependent stochastic demand," European Journal of Operational Research, Elsevier, vol. 272(1), pages 147-161.
    9. Jeonghye Choi & David R. Bell & Leonard M. Lodish, 2012. "Traditional and IS-Enabled Customer Acquisition on the Internet," Management Science, INFORMS, vol. 58(4), pages 754-769, April.
    10. Kappe, Eelco & Stadler Blank, Ashley & DeSarbo, Wayne S., 2018. "A random coefficients mixture hidden Markov model for marketing research," International Journal of Research in Marketing, Elsevier, vol. 35(3), pages 415-431.
    11. Hui Li & Qiaowei Shen & Yakov Bart, 2018. "Local Market Characteristics and Online-to-Offline Commerce: An Empirical Analysis of Groupon," Management Science, INFORMS, vol. 64(4), pages 1860-1878, April.
    12. Chan, Tat Y. & Narasimhan, Chakravarthi & Yoon, Yeujun, 2017. "Advertising and price competition in a manufacturer-retailer channel," International Journal of Research in Marketing, Elsevier, vol. 34(3), pages 694-716.
    13. Oz Shy, 2013. "Window shopping," Working Papers 13-4, Federal Reserve Bank of Boston.
    14. Amirali Kani & Wayne S. DeSarbo & Duncan K. H. Fong, 2018. "A Factorial Hidden Markov Model for the Analysis of Temporal Change in Choice Models," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(3), pages 162-177, December.
    15. Zhuang, Hejun & Popkowski Leszczyc, Peter T.L. & Lin, Yuanfang, 2018. "Why is Price Dispersion Higher Online than Offline? The Impact of Retailer Type and Shopping Risk on Price Dispersion," Journal of Retailing, Elsevier, vol. 94(2), pages 136-153.
    16. Delphine Irac & Claire Célérier & Philippe Askenazy, 2010. "Vente à distance, internet et dynamiques des prix," Économie et Prévision, Programme National Persée, vol. 194(3), pages 1-13.
    17. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    18. Man Yu & Laurens Debo & Roman Kapuscinski, 2016. "Strategic Waiting for Consumer-Generated Quality Information: Dynamic Pricing of New Experience Goods," Management Science, INFORMS, vol. 62(2), pages 410-435, February.
    19. Wang, Chong & Chen, Jing & Chen, Xu, 2019. "The impact of customer returns and bidirectional option contract on refund price and order decisions," European Journal of Operational Research, Elsevier, vol. 274(1), pages 267-279.
    20. Wen Chen & Adam J. Fleischhacker & Michael N. Katehakis, 2015. "Dynamic pricing in a dual‐market environment," Naval Research Logistics (NRL), John Wiley & Sons, vol. 62(7), pages 531-549, October.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:267:y:2018:i:2:p:612-627. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nithya Sathishkumar (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.