• Journal of Korean Society of Industrial and Systems Engineering
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• v.34 no.2
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• pp.68-75
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• 2011

The purpose of this paper is to suggest a supplier and buyer's pricing decision strategy model with discount-policy over a long-term replenishment contract in a supply chain environment by small and medium size manufacturing company. We assume that the buyer has a superior economic power over a supplier and each agent in a supply chain is unaware of each other. The supplier proposes pricing decision strategy to induce the buyer to choose the terms of contract for the benefit of the supplier. Then buyer decides the terms of contract to maximize her profit considering supplier's discount-policy. We also present a numerical example to illustrate the efficiency of pricing decision strategy.

• The Korean Journal of Franchise Management
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• v.14 no.4
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• pp.35-50
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• 2023

Purpose: This study aims to uncover the mechanism of how initial fees are determined in the restaurant franchise business. Since the initial fees can be considered as a price of utilizing business models and operational knowledge of a certain franchise brand, it is critical to understand the fee decision-making process based on the strategic pricing theories. Therefore, this study investigates the influence of operational value on the determination of initial franchise fees grounded on a value-based pricing strategy. The Operational value is specifically categorized into profitability, growth, and stability of the franchise system. Research design, data, and methodology: The data used were collected through franchise disclosure documents and brand equity index provided by Korea Management Association Consulting. Data from 44 franchise restaurants during 2018 to 2021 are included in the sample. The panel dataset was analyzed by using generalized least squares estimation with R-Studio. Results: Profitability and stability positively influence initial franchise fees. However, growth did not influence initial franchise fees. Conclusions: The results of the study demonstrate that the operational value plays a critical role in determining the franchise fees. Specifically, franchisees recognize how much revenue a franchise system generates for them (i.e., profitability) and how stable the entire system is for operating business (i.e., stability) when they make purchasing decisions for franchise. The findings extend the pricing literature by applying pricing theories in the franchise fee context. Also, the study contributes to franchising and restaurant management literature by providing knowledge of how franchise fees are determined.

• Health Policy and Management
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• v.13 no.4
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• pp.84-98
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• 2003

This research objective is to determine the optimal price break points for n­block tariff, because comparing non­linear pricing with uniform pricing on the basis of profit, n­block tariff outperforms two­part tariff, all unit discount price schedule, and uniform pricing. Although the merits of non­linear pricing are well documented, the attempt to practice the non-linear pricing in medical service sector has been relatively rare. The determination of the parameters under n­block tariff is the interesting decision making agenda for marketers. Under n­block tariff, the marketers should decide the optimal price break points and the optimal marginal price for each price zone. The results can be summarized as follows: The researchers found that mixture model can be the feasible methodology for determining the optimal number of n­block tariff and identifying the optimal segmentation criteria. We demonstrate the feasibility and the superiority of the mixture model by applying it to the database of medical examination. The results appear that the number of patients per month can be the optimal segmentation variable. And 6­block tariff is the optimal price break for this medical service.

• 한국경영정보학회:학술대회논문집
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• 2007.11a
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• pp.527-532
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• 2007

Differentiation strategies have been suggested as the critical sources of competitive advantage in B2C industry where customers can switch internet shopping mall with one click with virtually no transaction cost. Indeed, competition on low pricing cannot be a viable strategy in B2C industry. Moreover, cultivating customer loyalty to attain profitability is still a challenging task for most internet shopping mall. In this study, we provide empirical analysis results on key managerial variables that indicate the difference between the product categories in terms of customer perception on relative value importance. We first identified comprehensive managerial variables and organized them in terms of customer decision stage. Next, with reference to extant literatures on product characteristics based e-commerce strategy, hypotheses are developed to formalize the customer value differences on the key managerial variables. Empirical testing results indicated that there are significant differences on customer perceived value of the key managerial variables between the product groups. The findings provide useful insight for further study on e-commerce differentiation strategy.

• Korean Business Review
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• v.6
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• pp.135-152
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• 1993

The optional market segmentation pricing policy for rooms of hotels are investigated under the assumption of a linear demand function, and for four different situations: (1) single price market, (2) optimal segmentation of the unused capacity of a single-price-maeket, (3) optimal segmantation for all rooms, and (4) opimal segmentation for infiltration from higher priced to adjacent lower priced segments. The purpose of tis study is th show that with proper pricing policy, it would be possible to increase profits considerably. Such a profit increase might be achived by market segmentation coupled with product differentiation, where the different market segments are identified, sperated, and in each segment a different price per room is called for. The different prices are determined based on the specific price elasticity typical for each market segment and the relavant costs. The pricing model implied in this study is based on basic economic pricing theory and optimization techniques. While somewhat complex in its mathmatical solution, it can be easily programmed for use by practitioners, avoiding the need to cope with the technical aspects of the solution. In section II-1, the optimal single-market Single-price policy is evaluated. The optimal strategy under the constraint that only the previously unutilized rooms are segmented is analysed in section II-2, while the optimal strategy without this constraint is determined in section II-3. In section II-4, the optimal market-segmentation pricing policy is derived for the case in which market seperation is allowed for all the rooms under the assumption of custtomer infiltration from each market segment to the adjacent lower priced segment Finally, some considerations relating to the practicality of the model as a decision support tool and the requirements for its implementation are discussed in section III.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2005.05a
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• pp.904-913
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• 2005

This paper deals with an integrated problem of inventory control and dynamic pricing strategies for a commodity with price and sales-period dependent demand pattern, where a seller and customers have complete information of each other. The problem consists of two parts; one is each buyer's benefit problem which makes the best decision on price and time for buyer to purchase items, and the other one is a seller's profit problem which decides an optimal sales strategy concerned with inventory control and discount schedule. The seller's profit function consists of sales revenue and inventory holding cost functions. The two parts are closely related into each other with some related variables, so that any existing general solution methods can not be applied. Therefore, a simplified model with single seller and two customers in considered first, where demand for multiple units is allowed to each customer within a time limit. Therewith, the model is generalized for a n-customer-classes problem. To solve the proposed n-customer-set problem, a dynamic programming algorithm is derived. In the proposed dynamic programming algorithm, an intermediate profit function is used, which is computed in case of a fixed initial inventory level and then adjusted in searching for an optimal inventory level. This leads to an optimal sales strategy for a seller, which can derive an optimal decision on both an initial inventory level and a discount schedule, in $O(n^2)$ time. This result can be used for some extended problems with a small customer set and a short selling period, including sales strategy for department stores, Dutch auction for items with heavy holding cost, open tender of materials, quantity-limited sales, and cooperative buying in the on/off markets.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.34 no.3
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• pp.41-48
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• 2011

Recently, the increasing power of distributors has given them the opportunity of introducing private brand (PB) products. Based on the game theory, this study analyzes the decision making of a distributor regarding the optimal pricing and quality strategies for the PB product. By analyzing the game model, it is shown that the pricing mechanism heavily depends not only on the market power of the distributor but on the quality of the PB product. It is also shown that, counter intuitively, as the market power of the distributor increases, the optimal quality of the PB product should be decreased.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.42 no.2
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• pp.49-61
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• 2019

As the technological gap amongst manufacturers decreases, the life cycle of products has shortened, and competition accelerates due to the development of technology, incumbent manufacturing companies face growth limitations. In order to overcome such business issues, manufacturing companies are increasingly interested in changes in business models and innovations, especially in the direction of providing services where they can maintain the competitive advantage of their products. In such context, this empirical study examines managerial leadership, differentiation strategies, and products and services pricing as 'servitization factors', which can be driving forces for moving into a new era of growth for Korean SMEs, focusing on the mediating effects of servitization competency. The results are as follows : First, it was confirmed that executive leadership, differentiation strategy, and information & communication technology capability have a direct effect on service sales. Second, the process competency, partnership competency, and ICT competency, which are presented as the service competence of SMEs, were found to play an important role in inducing service sales in managerial leadership, differentiation strategy, product and services pricing. It also emphasized the role of the public policy such as helping to foster SMEs as key partners in the expansion of social facilities and establishing platforms through ICT and data utilization for the convergence of manufacturing services.

• Journal of Distribution Science
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• v.14 no.9
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• pp.5-13
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• 2016

Purpose - This study proposes a framework for service innovation strategy to cope with the emergence of electric vehicles. Research design, data, and methodology - This study designs an electric-vehicle lease program and collects the resulting data to analyze. By analyzing the previous studies on the electric-vehicle market with cases, a theoretical framework based on existing theories is to be set. Results - This study proposes a strategy for the rapid diffusion of electric vehicles. First, a partitioned-pricing system is proposed to create an advantage for electric vehicles in terms of initial purchasing cost relative to traditional internal combustion vehicles. Second, focusing on reducing switching costs is important because electric vehicles have relatively low resale values due to the uncertainty of battery life. Third, a battery-leasing strategy is supposed to reduce the cost of switching from a traditional internal combustion vehicle to an electric vehicle. Conclusions - This paper can provide strategic guidance for decision makers in firms that have already entered the electric-vehicle leasing market by making a recommendation such as a service innovation strategy. The proposed strategy can be considered as an electric vehicle market in the future and can contribute to the wider diffusion of electric vehicles.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2005.05a
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• pp.938-946
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• 2005

We study the firm's strategy to price its products and plan the spare parts manufacturing so as to maximize its profit and at the same time to fulfill its commitment to providing the customers with the key parts continuously over the relevant decision time horizon, i.e., the production plus warrantee period. To examine the research question, we developed and solved a two-stage optimal control theory model. Our analysis suggests that if the cost to produce the spare part during the warrantee period is more expensive than that during the production period, the firm should increase its sales price gradually throughout the production period to control its sales. In addition, during the production period it is optimal for the firm to produce the spare parts more than needed so that the overproduced spare parts can be used to partially meet the demand during the warrantee period. We conducted numerical analysis to investigate the sensitivity dynamics among key variables and parameters such as inventory holding cost, unit spare part production costs, part failure rate, and parameters in the demand function.