A Comparative Study On Conventional Products And New Products Pre-sale And Buy-back Joint Pricing Strategy

Facing high surplus and shortage risk caused by market demand uncertainty, dealers usually apply advance selling strategy to improve predictive accuracy to a certain extent. But for strategic consumers whose valuation is uncertain in advance selling period, advance purchasing may lead to loss when realized valuation is lower than expectation or when consumer psychology or external environment changes. Buy-back policy can encourage consumers to advance buy by reducing this loss, but its effects on the retailer's profit is still unknown.The current research of the buy-back strategy mostly concentrates on the supply chain buy-back contract between suppliers and distributors. There are few literatures for buy-back strategy applied to the presale problem. Therefore, in the advance selling problem, whether it is beneficial for the retailer to apply buy-back strategy and how to make the buy-back price and ordering decision are all valuable problems worth studying.According to different product characteristics, we divide presale products into two categories-conventional and new products. By respective analysis, we achieve results as below. In the pre-sale of conventional products, changes in consumers' consumption psychology are common returning reasons. In this case, partial buy-back policy gains the highest profit. In advance selling of new products, consumers return because the products do not meet their expectation. Under this circumstance, buy-back policy is not beneficial to the dealer for it will increase the demand uncertainty, making it difficult to make ordering decision.Besides, we expand the above models to study the retailer's decisions under the assumption that returned products cannot be sold again. The retailer's optimal buy-back price is salvage value and retailer's profit is lower than that in the model of conventional products.Finally, we conclude this thesis and look to the future research.