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A two period pricing model for new fashion style launching strategy

Author

Listed:
  • Zhou, Erfeng
  • Zhang, Juzhi
  • Gou, Qinglong
  • Liang, Liang

Abstract

There is a trend in fashion product industry that firms launch new styles of their products more frequently. To investigate the optimal style launching strategy for a fashion firm, we propose a two-period pricing model for a fashion product firm. The firm sells a style of products in the first period as well as that he may utilize three different strategies in the second period, i.e., (i) the N-Strategy: the firm does not launch a new style; (ii) the S-Strategy: the firm launches a new style and stops selling the previous one immediately; and (iii) the D-Strategy: the firm sells the new and old style simultaneously in the second period. Different from previous literatures, we incorporate the satiation effect of consumers in our model and try to analyze its impacts on the fashion firm׳s new product launching strategy. Specifically, we assume that a consumer occurs a certain mental book value cost x if he/she has already purchased a previous style of the same brand.

Suggested Citation

  • Zhou, Erfeng & Zhang, Juzhi & Gou, Qinglong & Liang, Liang, 2015. "A two period pricing model for new fashion style launching strategy," International Journal of Production Economics, Elsevier, vol. 160(C), pages 144-156.
  • Handle: RePEc:eee:proeco:v:160:y:2015:i:c:p:144-156
    DOI: 10.1016/j.ijpe.2014.10.008
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    References listed on IDEAS

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    Cited by:

    1. repec:spr:annopr:v:244:y:2016:i:2:d:10.1007_s10479-016-2114-7 is not listed on IDEAS
    2. repec:eee:proeco:v:201:y:2018:i:c:p:116-135 is not listed on IDEAS
    3. Raza, Syed Asif, 2015. "An integrated approach to price differentiation and inventory decisions with demand leakage," International Journal of Production Economics, Elsevier, vol. 164(C), pages 105-117.
    4. Wei-Bin Zhang, 2016. "Fashion with Snobs and Bandwagoners in a Three-Type Households and Three-Sector Neoclassical Growth Model Representación del consumo: Modelo de Crecimiento Neoclásico con Tres Factores," Remef - The Mexican Journal of Economics and Finance, Instituto Mexicano de Ejecutivos de Finanzas. Remef, June.
    5. repec:eee:proeco:v:193:y:2017:i:c:p:31-39 is not listed on IDEAS
    6. repec:lrc:larjob:v:2:y:2017:i:3:p:1-13 is not listed on IDEAS
    7. Raza, Syed Asif & Rathinam, Sivakumar, 2017. "A risk tolerance analysis for a joint price differentiation and inventory decisions problem with demand leakage effect," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 129-145.
    8. Shen, Bin & Qian, Rongrong & Choi, Tsan-Ming, 2017. "Selling luxury fashion online with social influences considerations: Demand changes and supply chain coordination," International Journal of Production Economics, Elsevier, vol. 185(C), pages 89-99.
    9. Song, Yanan & Zhao, Xiaobo, 2016. "Strategic customer behavior facing possible stockout: An experimental study," International Journal of Production Economics, Elsevier, vol. 180(C), pages 57-67.

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