Abstract:

Cross-time sales influence makes an interesting phenomenon emerge in the market--promote first or pricing first in the first sale period for new product have different influence on the second period’s sales for Iphone7, YSL Lipstick and Chevrolet SUV. This paper analyzes this problem by building two periods supply chain game model. When they are going to launch a new product, the supplier determines retail price and the retailer makes sales effort. Meanwhile, sales effort in the first period has effect on the demand in the second period. This paper seeks to shed light on the impacts of different strategies on the profits of supplier and retailer considering the cross-time sales effort effect. We consider four strategies: pricing first in both of the two periods(C-C strategy), pricing first in the first period and promote first in the second period(C-F strategy), promote fist in the first period and pricing in the second period (F-C strategy), promote first in both of the two periods(F-F strategy). We introduce revenue sharing contract and sales cost sharing contract. Our results show that: 1) Either the supplier or retailer should not choose F-C strategy. 2) When price sensitivity or promotion cost is higher, these strategies coordinate or conflict between the supplier and the retailer. Particularly, when revenue sharing coefficient is smaller and cost allocation coefficient is bigger, it benefits both of the supplier and the retailer to choose C-F strategy; when revenue sharing coefficient is bigger and cost allocation coefficient is smaller, it benefits both of the supplier and the retailer to choose C-C strategy.

Key words: New product, Game theory, Pricing, Promotional effect