Promotional Pricing for FMCG

What is it about?

How should FMCG firms refine their price promotions, how often and how much discounts to offer to win customers without sacrificing too much margins. Firms need to not only be careful about competitive reaction but also account for the fact that some consumers may stockpile for future at lower prices leading to inter temporal shifts in demand.

Featured Image

Why is it important?

This work shall help marketers mange their price promotions better. The paper derives an optimal promotional strategy in a more realistic multi-firm multi-period setting. The optimal pricing strategy derived in this paper is in line with more widely used Hi-Lo pricing strategy as opposed to EDLP and explains observed negative inter temporal correlation in prices and post promotion dip in sales.