AN EMPIRICAL STUDY OF RETAILER''S DYNAMIC PRICING STRATEGY

• Main Authors: Lin, Yih-Min, 林意敏
• Other Authors: LI-CHUNG, JEN
• Format: Others
• Language: zh-TW
• Published: 1998
• Online Access: http://ndltd.ncl.edu.tw/handle/08712691337302945689

碩士 === 國立臺灣大學 === 國際企業學系研究所 === 86 === This study is to discuss the retailer''s best pricing strategy based on the dynamic viewpoint in the market. Following Dickson''s theory of competitive rationality, we set up a dynamic model of the interaction between supply (retailer promotion strategy) and demand (consumer reaction) and consider the strategic implications for the retailer promotion strategy. There are two important aspects which should be investigated. First, we want to know how the retailer''s pricing strategy affects the consumer price sensitivity through changing price structure. Then the other one is how the heterogeneity in consumer response rate creates an imbalance of supply and demand to leads to adjusting retailer''s pricing strategy. Retailers decide the brand of products on sale based on relative price and decide an optimal markup rate or level based on merchandises'' absolute price. The changes of price level are differentiated into changes in relative price and absolute price, and find the relationship between them. Then we define the consumer price sensitivity in terms of self-price elasticity and cross-price elasticity. And consider the different possible results of consumer price sensitivity as prices change. Based on Dickson''s competitive rationality theory, we present a dynamic model of retail promotion strategy and using tuna scanner data from Chicago Jewel Food Store Company to examine the interaction between retail pricing decision and consumer price sensitivity. Finally, we summarize the results in the last section and discuss the managerial implications. The conclusions of this study are presented as follows : 1.The consumers in tuna canning market are price elastic. 2.There are more and more promotion activities in different suppliers and the pricing competition is intense. 3.The consumer price sensitivity is always changing and related to merchandises'' price variation. 4.Between the period 40 to 70 and week 110 to 122, we see stable changes in absolute prices which are closely associated with the degree of price variation. This phenomenon reasonably explain the dynamic interaction between retailer''s strategy and consumer''s reaction, i.e. a market is permanent disequilibrium. 5.Retailers adopt successful sales promotion to alter the self- price elasticity and cross-price elasticity and find opportunities to gain more profit. There are cyclic interaction between retailer promotion strategy and consumer reaction. The implication of this study is as followed: For the permanent disequilibrium of market, successful retailers are those who are very keen and unbiased to recognize the change of demand market and find the opportunity positively to response to this imbalance. Retailers can gain more profit through altering consumer''s self-price elasticity and cross- price elasticity. Those who can implement this strategy effectively get abnomal profit.