In-Store Experiments to Determine the Impact of Price on Sales
This paper describes an experimentation methodology to measure how demand varies with price and the results of its application at a toy retailer. The same product is assigned different price‐points in different store panels and the resulting sales are used to estimate a demand curve. We use a varian...
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| Veröffentlicht in: | Production and operations management 2005-12, Vol.14 (4), p.377-387 |
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| creator | Gaur, Vishal Fisher, Marshall L. |
| description | This paper describes an experimentation methodology to measure how demand varies with price and the results of its application at a toy retailer. The same product is assigned different price‐points in different store panels and the resulting sales are used to estimate a demand curve. We use a variant of the k‐median problem to form store panels that control for differences between stores and produce results that are representative of the entire chain. We use the estimated demand curve to find a price that maximizes profit. Our experiment yielded the unexpected result that demand increases with price in some cases. We present likely reasons for this finding from our discussions with retail managers. Our methodology can be used to analyze the effect of several marketing and promotional levers employed in a retail store besides pricing. |
| doi_str_mv | 10.1111/j.1937-5956.2005.tb00227.x |
| format | Article |
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| ispartof | Production and operations management, 2005-12, Vol.14 (4), p.377-387 |
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| language | eng |
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| source | Wiley Journals; Business Source Complete; SAGE Complete A-Z List |
| subjects | Demand curves Design Design of experiments Electronic data interchange experiment design Experiments Inventory Marketing Operations management Prices pricing Pricing policies Product life cycle Profits Purchasing retail operations Retail stores Retailing industry short lifecycle products Studies Toys |
| title | In-Store Experiments to Determine the Impact of Price on Sales |
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