재고비용의 이질성을 고려한 EDLP-PROMO 공존모형에 관한 연구The study on the coexistence model of EDLP store and PROMO store considering stockpiling cost heterogeneity
- Other Titles
- The study on the coexistence model of EDLP store and PROMO store considering stockpiling cost heterogeneity
- Authors
- 이기엽
- Issue Date
- 2006
- Publisher
- 한국상품학회
- Citation
- 상품학연구, v.24, no.3, pp.127 - 152
- Journal Title
- 상품학연구
- Volume
- 24
- Number
- 3
- Start Page
- 127
- End Page
- 152
- URI
- https://scholarworks.bwise.kr/hongik/handle/2020.sw.hongik/24649
- ISSN
- 1226-6132
- Abstract
- From 90's, the biggest change in Korean retail industry is the sharp increase in retail stores using different pricing strategy. New type of stores like discount stores is characterized by their pricing strategy called EDLP. Everyday low pricing (EDLP) is the pricing strategy offering constant price lower than that of competitive stores. Traditional department stores or supermarkets offer lower sale price for limited number of items, rotating sale items. This pricing strategy is called promotional pricing (PROMO).
Which pricing strategy is better, EDLP or PROMO? In reality, we can observe that some stores use PROMO and others use EDLP. That means one pricing strategy does not dominate the other. The purpose of this research is to show that stores using PROMO and stores using EDLP can coexist in the same market. We show that a firm can do better by opening both PROMO stores and EDLP stores, than by opening PROMO stores only or EDLP stores only.
Through simple economic model, following results are found:
First, consumers with low stockpiling cost or shopping trip cost have higher stockpiling propensity, and can use lower discount price more intensively.
Second, Assuming coexistence of PROMO store and EDLP store with positive profit, consumers with higher stockpiling cost or shopping trip cost prefer EDLP store to PROMO store.
third, under PROMO-PROMO, profit of individual store is greater than or equal to that under EDLP-EDLP. When b, which is parameter showing stockpiling cost heterogeneity, is very high, the advantage of PROMO-PROMO vanishes and EDLP-EDLP equilibrium holds.
fourth, under EDLP-PROMO, profit of individual store is greater than or equal to that under PROMO-PROMO. When b is very low, the advantage of EDLP-PROMO vanishes and PROMO-PROMO equilibrium holds.
finally, when b has a mid-range value, the profit advantage of EDLP-PROMO over PROMO-PROMO become substantial.
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Collections - College of Business Administration > Business Administration Major > 1. Journal Articles
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