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A Mathematical Model for Price Promotions

Author

Listed:
  • Yoram Kinberg

    (Chase Manhattan Bank)

  • Ambar G. Rao

    (New York University)

  • Melvin F. Shakun

    (New York University)

Abstract

A market where two groups of brands, premium (higher priced) and private label (lower priced) are sold is considered. It is assumed price is the only indicator of quality. Using hypotheses about consumer behavior in such markets, a model for changes in market share that would result from temporary price reductions by one of the premium brands is constructed. The model is used to develop promotional strategies for one of the premium brands, given various assumptions about competitive behavior. Methods for use of the model are suggested.

Suggested Citation

  • Yoram Kinberg & Ambar G. Rao & Melvin F. Shakun, 1974. "A Mathematical Model for Price Promotions," Management Science, INFORMS, vol. 20(6), pages 948-959, February.
    • Handle: RePEc:inm:ormnsc:v:20:y:1974:i:6:p:948-959
    DOI: 10.1287/mnsc.20.6.948
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    Cited by:

    1. Raju, Jagmohan S., 1995. "Theoretical models of sales promotions: Contributions, limitations, and a future research agenda," European Journal of Operational Research, Elsevier, vol. 85(1), pages 1-17, August.
    2. Groznik, Ana & Heese, H. Sebastian, 2010. "Supply chain interactions due to store-brand introductions: The impact of retail competition," European Journal of Operational Research, Elsevier, vol. 203(3), pages 575-582, June.
    3. Paul Mills & César Zamudio, 2018. "Scanning for discounts: examining the redemption of competing mobile coupons," Journal of the Academy of Marketing Science, Springer, vol. 46(5), pages 964-982, September.

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