Abstract:

In practice， the term advance sale mainly refers to a marketing practice in which the seller offers buyers opportunities to make purchases before the time of consumption. Advance sale endows a retailer with the opportunity for recovery cost and earning profit as soon as possible， and lowers the inventory risks. For a retailer with financial stress， one main target is to sell out her products early， which may be achieved by advance selling. From this perspective， a same amount of profit earned at the advance-selling period is of more value than that earned at the spot-selling period. In order to acquire demand information and recoup the cost， more and more retailers adopt the advance-selling strategy and make promotion at the advance-selling period. A discount factor is brought in in this research to measure profits earned at different periods. The protagonist of this paper is a retailer who arranges a two-period sale and respectively prices her produces at different periods. Sales prices of the two periods are declared once the advance-selling period begins， which implies the retailer is able to regulate and control the demand of each sale period by setting different prices. In order to counteract the shortcomings of future goods sold in the advance-selling period， sales promotion may be adopted at this period. According to whether to make promotion or not in the advance-selling period， the discussed topic is grouped into two categories， and examine six selling strategies. By analyzing the achieved results， the understanding is formalized and several propositions are shown. Some meaningful conclusions are drawn through these propositions： （a） it is shown that “advance sale + spot sale” is always optimal when sales promotion is not adopted； and （b） “advance sale + spot sale” mode under sales promotion made in the advance-selling period cannot be optimal when the strain level of the retailer’s finance is low. Numerical examples are designed to analyze the sensitivity of each crucial parameter and examine the change of a retailer’s selling strategy.

Key words: advance sale, pricing strategies, discount factor, sales promotion