دانلود رایگان مقاله یک سیستم برای قیمت گذاری توزیع و فروش از blockbusters

Abstract

The long tail of retailing has been both a challenge and an opportunity for online retailers. This article provides guidelines for enhanced decision making strategies in pricing dependent on popularity, cross-sales quantity and reservation prices. Our model shows that if customer willingness to pay, or reservation price, is higher for less popular items in a category, a unique optimal price path exists which requires deep discounts on popular items. However, if the reservation price is lower for less popular items, the optimal price path is conditional on the profitability of cross-selling and the potential loss from the business of loyal customers. Analyzing data on books, songs and movies from Amazon.com, we provide empirical support for our model findings. An analysis of the same set of movies available both as instant videos and DVDs allow us control for unobserved product characteristics and yields contradictory price paths along the sales rank distribution with increasing prices for DVDs and decreasing prices for streaming movies, as predicted by our model.

5. Conclusion

Online retailing has enabled customers to browse practically unlimited selections to find music, books and movies. When sales, as well as traffic generation promise and reservation prices, depend on the popularity of items, oligopolistic retailers managing vast catalogs face both opportunities and challenges. How can a retailer enhance its pricing systems to determine the relative levels of prices across the distribution to account for the dynamics of own and cross-sales of items with popularity-dependent reservation prices? Our modeling effort distinguishes two separate forces that a pricing DSS should incorporate. The first force is the profitability of selling and cross-selling. The optimal pricing strategy that accounts for both own and cross-sales of items mandates a power law of prices that calls for disproportionate discounts on the superstars and diminishing but positive discounts on the middle and long tail items. The second force is the profitability from potential margins. A higher reservation price commanded by a popular or niche item enables the extraction of a premium that may increase or decrease along the sales distribution. Our model findings show that any non-decreasing reservation price function yields an optimal pricing strategy in which retailers price superstars lower than any non-hit item. Our analysis of the average customer reviews of books along the sales rank reveals such nondecreasing reservation prices. Consequently, our empirical section supports the model prediction of an increasing price path for the book category.