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Learning in Advance Selling with Heterogeneous Consumers

Author

Listed:
  • Oksana Loginova
  • X. Henry Wang
  • Chenhang Zeng

Abstract

Advance selling occurs when consumers order a firm's product prior to the regular selling season. It reduces uncertainty for both the firm and the buyers and enables the firm to better forecast its future demand. The distinctive feature of this paper is that there are both experienced and inexperienced consumers, with the former knowing their valuations of the product in advance. We show that pre‐orders from experienced consumers lead to a more precise forecast of future demand by the firm and that the optimal pre‐order price may be at a discount or a premium relative to the regular selling price. Copyright © 2016 John Wiley & Sons, Ltd.

Suggested Citation

  • Oksana Loginova & X. Henry Wang & Chenhang Zeng, 2017. "Learning in Advance Selling with Heterogeneous Consumers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(6), pages 765-783, September.
    • Handle: RePEc:wly:mgtdec:v:38:y:2017:i:6:p:765-783
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    Cited by:

    1. Oksana Loginova, 2021. "Advance selling, competition, and brand substitutability," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1765-1781, October.
    2. Yurong Pei & Mengying Xie & Qiuling Yang & Yi Liao & Yuping Wu, 2021. "Effect of Consumer Strategic Behavior on Online Presale Strategy," Sustainability, MDPI, vol. 13(19), pages 1-21, October.
    3. Wen Zhang & Yi He, 2020. "Optimal advance selling discount strategy with future‐oriented consumers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(3), pages 308-320, April.
    4. Jun, Sung Youl & Kim, Kyung Ho & Park, Hye Kyung, 2019. "The effect of the preorder strategy on consumers' product choice: The moderating role of product experience and payment timing," Journal of Business Research, Elsevier, vol. 99(C), pages 80-86.
    5. repec:umc:wpaper:1303 is not listed on IDEAS
    6. Chenhang Zeng, 2013. "Optimal Advance Selling Strategy under Price Commitment," Pacific Economic Review, Wiley Blackwell, vol. 18(2), pages 233-258, May.
    7. Junshan Lin & Chenhang Zeng, 2023. "Pre-order strategies with demand uncertainty and consumer heterogeneity," The Japanese Economic Review, Springer, vol. 74(1), pages 83-115, January.
    8. Yawen Zhang & Bo Li & Xue Chen & Shuang Wu, 2020. "Online advance selling or not: Pricing strategy of new product entry in a supply chain," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(8), pages 1446-1461, December.
    9. Rufeng Wang & Siqi Wang & Shuli Yan, 2021. "Pricing and Coordination Strategies of Dual Channels Considering Consumers’ Channel Preferences," Sustainability, MDPI, vol. 13(20), pages 1-15, October.
    10. Ren Wang & Jie Hou & Hui Song, 2020. "Use prices as sales agents," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(7), pages 1349-1364, October.
    11. Chen, Yan & Fang, Yanli & Kuo, Yong-Hong, 2024. "Demand cannibalization during product rollovers in the presence of strategic customers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 192(C).

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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