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Bundle pricing strategies for two complementary products with different channel powers

  • Game theory and optimization
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Abstract

In this paper, we consider a duopoly market where two manufacturers separately produce and sell two complementary products through a common retailer as a leader–follower movement. The competition has been studied in two-echelon supply chain system and all produced products are sold by the retailer with individual product prices or with pure products’ bundling price in the non-cooperative market. The demand of each product linearly depends on prices of these two products as per their nature. Here, model for two different cases (without and with pure products’ bundling) are developed mathematically to maximize the profit of each participant of the supply chain and then corresponding optimal pricing strategies are worked out for the manufacturers and retailer. It is shown that supply chain profit for the pure bundling is better than the profit when products are sold at individual prices. Finally, the model is illustrated with numerical data to study the effects of models’ parameters in the pricing strategies and some marketing decisions are explored.

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Acknowledgements

The authors greatly appreciated the editors and the anonymous referees for their valuable comments and suggestions to improve the paper in the present form. Also, the first author is gratefully to University Grants Commission (UGC, India) for partially financial support to continue this research work by Innovative Research Project Grants (Ref. No. VU/Innovative/Sc/03/2015).

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Authors and Affiliations

  1. Department of Applied Mathematics with Oceanology and Computer Programming, Vidyasagar University, Midnapore, 721102, India

    Raghu Nandan Giri, Shyamal Kumar Mondal & Manoranjan Maiti

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  1. Raghu Nandan Giri
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  2. Shyamal Kumar Mondal
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  3. Manoranjan Maiti
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Correspondence to Raghu Nandan Giri.

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Giri, R.N., Mondal, S.K. & Maiti, M. Bundle pricing strategies for two complementary products with different channel powers. Ann Oper Res 287, 701–725 (2020). https://doi.org/10.1007/s10479-017-2632-y

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  • DOI: https://doi.org/10.1007/s10479-017-2632-y

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