Optimizing dynamic pricing strategy when selling goods with saturated demand

Abstract

The expansion of the possibilities of conducting the pricing policy of a retailer of normal goods during the transition to a dynamic pricing strategy has been considered. The market of such goods has been defined as an oligopolistic market of goods with saturated demand and purpose of production. The main method of researching aspects of pricing is the market mathematical modeling. To characterize it, the concept of the saturation coefficient of the market has been introduced, which shows the rate of decrease in the equilibrium price of goods with an increase in the total number of such goods on the market. Special demand functions have been developed that reflect the characteristics of a normal product with saturated demand, and algorithms for estimating the parameters of such a product using econometric methods have been built. The issue of optimizing dynamic price of a product has been formulated in a general way, and its mathematical model has been constructed, which uses a special demand function. An algorithm for solving the issue for a stepwise price function using the Lagrange conditional optimization method has been developed. A critical range of parameters characterizing the properties of a product being sold has been determined, going beyond which requires a transition to dynamic pricing. The optimal values of stepwise dynamic price have been determined. A methodology for optimizing dynamic pricing in a specific retail organization selling normal goods has been compiled, and ways to improve the methodology have been indicated when considering the competitive environment in which an enterprise in question operates.