A study on limited pre-sale strategy with consideration of consumer regret

Abstract

The effect of regret on consumers’ purchasing behavior is more and more obvious. The limited pre-sale can make retailers with limited production capacity allocate two periods of stock effectively and increase their income. This paper considers the heterogeneous consumers with regret behavior in the market and constructs a model to study the retailer’s optimal limited pre-sale strategy. The results show that the high price regret sensitivity negatively affects the higher price of the products in the pre-sale strategy, while the out-of-stock regret sensitivity negatively affects the retailer’s profit When the production capacity is relatively low, the proportion of rational consumers is large and the high price regret sensitivity coefficient is small, the retailer should pre-sell at a limited discount and the lowest valuation, and the highest valuation is on sale, otherwise, it should be sold at a price slightly lower than the highest valuation, but when the capacity is very sufficient, the sensitive coefficient of stock-out regret is small and the proportion of rational consumers is small, the retailer should pre-sell at an unlimited premium, and a price slightly lower than the highest valuation of the pre-sale, the lowest valuation of the sale, or should be pre-sold at the highest valuation.