Analysis Of Competitive Enterprises’ Advance-selling Strategy Considering Uncertain Quality

Advance selling means that an enterprise provides consumers in the market with an opportunity to buy products(or services)in advance before the formal sale of the products.With the rapid development of e-commerce,advance selling has become a common means in the sales industry.The advance selling strategy has been adopted by more and more enterprises to expand their profits.The existing literature studies that in the monopoly market,enterprises can effectively improve their sales profits by adopting the advance selling strategy.However,this conclusion may not hold when enterprises are facing competition.In this thesis,we study the advance selling of two competing enterprises under the Hotelling framework.Enterprises sell products in the advance selling period and spot selling period respectively.We consider a two-stage model,in which consumers are hardly informed of the product quality during the advance-selling period.At the beginning of the spot period,the remaining consumers in the market can learn more about the quality based on the reviews generated by early buyers.Firstly,this thesis studies the optimal sales strategy of two competitive enterprises without considering social learning.Our results show that both firms will adopt the advance selling strategy if the intensity of competition is strong or weak and the signal accuracy is low;while they reach an asymmetric equilibrium with one of the firms not applying the advance-selling strategy for a moderate competition intensity.If the signal accuracy is higher,the impact of the intensity of market competition will be weakened.Secondly,this thesis studies the advance selling strategies of two enterprises in monopoly market and competitive market when they participate in social learning,that is,consumers in the advance selling period can provide effective product comments for the spot period.Some interesting findings are obtained through mathematical modeling and numerical analysis.In the monopoly market,facing highly strategic consumers,it is better for enterprises not to adopt advance selling strategy to deal with consumers’ decision to postpone purchase so as to obtain higher profits.For consumers with low strategy,enterprise can obtain high profits through advance selling.In the competitive market,when consumers are less strategic,the best strategy of enterprises is to adopt advance selling strategy.With the improvement of consumer strategy,they reach an asymmetric equilibrium with one of the firms not applying the advance-selling strategy for an optimistic market.It can be seen that advance-selling strategy does not always bring benefits to enterprises in competitive situations.