Research On The Joint Strategy Of Advance-selling And Buy-back For Seasonal Perishable Products Facing Strategic Consumers

In today’s increasingly competitive market environment,vendors use a variety of marketing strategies to maximize their profits, such as dynamic pricing, return policy, and so on. Advance selling strategy is a marketing strategy used by most businesses now. Advance selling strategy can raise funds to produce or order products for the vendors in advance. It also can lock a part of demand. One can use the amount of pre-order to predict demand of sales period and reduce the uncertainty of demand. Therefore, the advance selling strategy can bring great benefits to vendors. But it also may reduce profit margins because of advance selling price discount and reduce the overall sales volume because of stock limitation, etc. These are against sellers downside. Will the advance selling strategy be favorable or unfavorable to the seller from the comprehensive influence? This paper obtains the necessary and sufficient conditions under which the seller should take advance selling strategy through modeling and analyzing. When the unite cost is low, the seller should take advance selling strategy. It provides a theoretical basis and guidance for the sellers’ actual decision.Usually the advance selling is accompanied by incentives of price. That’s to say, the advance selling price has certain discount on the basis of the sales price in order to attract consumers to buy in advance. However, consumers usually can’t determine the valuation of the product, in the advance selling period. Therefore, while consumers enjoy preferential, they also bear the risk of loss. With the gradual rich consumption experience, consumer behavior is increasingly strategic. Strategic consumers will take the risk of loss into account, and they will compare pre-order and no pre-order before making decision. Therefore, the existence of risk may reduce consumers’ enthusiasm for pre-order.We consider that if the seller buys back the coupons in the sales stage, the consumers’ benefit can be protected to a certain degree, so that the pre-order is more attractive to consumers and the seller’s interest is enhanced. This paper combines advance selling strategy and buy back strategy creatively. It establishes newsvendor model based on consumers’ strategic behavior and compares single advance selling strategy with the joint strategy of advance-selling and buy-back. It obtains the optimal advance-selling prices and optimal order quantities by establishing seller’s revenue models. We find that when the unit order cost of the products is high, compared the single advance-selling strategy, the implementation of the joint strategy of advance-selling and buy-back can enable the retailer obtain more profit, increase the optimal advance-selling price and decrease the optimal ordering quantity, so as to make decision support for the marketing strategy of the retailer. We also study another joint strategy of advance-selling and buy-back by numerical study and the result is consistent with the front one’s.