Online pricing with bundling and coupon discounts

We propose an online pricing strategy by utilising product bundling and coupon discounts. Given customer's purchase behaviour and preference for bundling and coupon, we propose a nonlinear mixed-integer programming model to determine the most appropriate bundle discount and instant coupon so as...

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Bibliographic Details
Published in:International journal of production research Vol. 56; no. 5; pp. 1773 - 1788
Main Authors: Jiang, Yuanchun, Liu, Yezheng, Wang, Hai, Shang, Jennifer, Ding, Shuai
Format: Journal Article
Language:English
Published: London Taylor & Francis LLC 04.03.2018
Subjects:
Bundling
Discount coupons
Discounts
Heuristic methods
Integer programming
Parameter uncertainty
Pricing
ISSN:0020-7543, 1366-588X
Online Access:Get full text
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Summary:We propose an online pricing strategy by utilising product bundling and coupon discounts. Given customer's purchase behaviour and preference for bundling and coupon, we propose a nonlinear mixed-integer programming model to determine the most appropriate bundle discount and instant coupon so as to maximise e-tailer's profit. A fast heuristic algorithm is designed to implement the proposed model online in real time. We investigate the robustness of the proposed method by examining how uncertainties in system parameters affect performance. Through collaborative optimisation, we offer important insights and managerial implications, and show how marketers can attract more purchase and maximise profit by properly integrating marketing tools such as bundling and coupon.
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ISSN:0020-7543
1366-588X
DOI:10.1080/00207543.2015.1112443