scholarly journals Intelligent markdown pricing

2012 ◽  
Vol 13 (3) ◽  
pp. 207-220 ◽  
Author(s):  
Barry Leventhal ◽  
Tom Breur
Keyword(s):  
Markdown Pricing

OPTIMAL MARKDOWN PRICING STRATEGY WITH DEMAND LEARNING

2011 ◽  
Vol 26 (1) ◽  
pp. 77-104 ◽  
Author(s):  
H. Dharma Kwon ◽  
Steven A. Lippman ◽  
Christopher S. Tang
Keyword(s):  
Posterior Probability ◽  
New Product ◽  
Threshold Policy ◽  
Demand Learning ◽  
Posterior Probability Distribution ◽  
Demand Volatility ◽  
Markdown Pricing ◽  
The Impact ◽  
Value Of Learning ◽  
Initial Price

When launching a new product, a firm has to set an initial price with incomplete information about demand. However, after observing the demand over a period of time, the firm might decide to mark down the price, especially when the Bayesian updated belief about demand is lower than originally anticipated. We consider the case in which the manufacturer makes three decisions: initial price, when to mark down the price, and the markdown price. Modeling the cumulative demand as a Brownian motion with an unknown drift, we compute the posterior probability distribution of the unknown drift. We then show that it is optimal to mark down the price when the posterior probability is below a computable threshold. This threshold policy enables us to determine the optimal (a) regular price, (b) markdown price, and (c) markdown time. Additionally, we examine the impact of demand volatility and evaluate the value of learning.

Markdown Pricing with Quality Perception

2020 ◽  
Author(s):  
Rim Hariss ◽  
Georgia Perakis ◽  
Wichinpong Sinchaisri ◽  
Yanchong Zheng
Keyword(s):  
Quality Perception ◽  
Markdown Pricing
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