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Examining the performance index of retail pricing strategies under different types of competition

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  • Ilyoung Jung
  • Imsu Park
  • Jeong Hoon Choi

Abstract

This study aims to measure and compare the efficiency of two pricing strategies of retail chains, a Hi-Lo pricing strategy and an everyday low price (EDLP) strategy, according to different types of competition. This research suggests the speed of price adjustment approach to measure the efficiency of retail chains, and the nonlinear seemingly unrelated regression estimation captures the impacts of market competition. The findings suggest that, in highly competitive markets, the Hi-Lo chains show a greater speed of price adjustment, whereas a slower speed is shown in less concentrated markets. In particular, the Hi-Lo chains in the market leader position with the EDLP followers show that the speed of price adjustment is slower than in other markets. When Hi-Lo chains compete with each other in the same market, they offer price discounts more aggressively and adjust the price rapidly as a means to maintain their market position.

Suggested Citation

  • Ilyoung Jung & Imsu Park & Jeong Hoon Choi, 2018. "Examining the performance index of retail pricing strategies under different types of competition," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 10(3/4), pages 290-325.
    • Handle: RePEc:ids:ijrevm:v:10:y:2018:i:3/4:p:290-325
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    Cited by:

    1. Imsu Park & Ilyoung Jung & Jeonghoon Choi, 2020. "Market competition and pricing strategies in retail supply chains," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(8), pages 1528-1538, December.

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