DocumentCode :
2965161
Title :
The valuation of money-back guarantees in retailing markets: A real option approach
Author :
Luo, Lieh-Ming ; Lee, Hui-Tzu ; Hsieh, Yu-Ping
Author_Institution :
Dept. of Int. Trade & Finance, Fu Jen Catholic Univ., Taipei, Taiwan
fYear :
2009
fDate :
8-11 Dec. 2009
Firstpage :
2426
Lastpage :
2430
Abstract :
In this paper, we propose an optimal pricing model for the money-back guarantee (MBG) which is a widely used mechanism to reduce consumers´ perceived risk in retailing markets. In comparison with previous researches, this study especially adopts the concept of stochastic underlying process from conventional real option techniques and explores optimal pricing strategies for MBG from the consumers´ perceived value-based viewpoint. This stochastic process can describe the uncertainties associated with product valuation by consumers. This research addresses how a retailer can make optimal pricing strategy for MBG, and to investigate the effects of some important factors on the MBG value. An alternative model is developed to determine the optimal pricing strategy for MBG under various conditions. The results could provide retailers with several management implications and could be a reference to help retailers make decision optimally for the pricing issues about MBG.
Keywords :
pricing; retailing; stochastic processes; money-back guarantees; optimal pricing model; retailing markets; stochastic process; Cost accounting; Electronic mail; Finance; International trade; Internet; Marketing and sales; Pricing; Risk management; Stochastic processes; Uncertainty; Consumers´ perceived value; Money-back guarantees; Real option approach; Retailing markets; Stochastic process;
fLanguage :
English
Publisher :
ieee
Conference_Titel :
Industrial Engineering and Engineering Management, 2009. IEEM 2009. IEEE International Conference on
Conference_Location :
Hong Kong
Print_ISBN :
978-1-4244-4869-2
Electronic_ISBN :
978-1-4244-4870-8
Type :
conf
DOI :
10.1109/IEEM.2009.5372959
Filename :
5372959
Link To Document :
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