| Title |
Effective pricing strategy in a retail store: category level promotion plan optimization / |
| Translation of Title |
Efektyvi kainodara mažmeninės prekybos parduotuvėje: kategorijos lygio nuolaidų plano optimizavimas. |
| Authors |
Kubilius, Žilvinas |
| Full Text |
|
| Pages |
81 |
| Keywords [eng] |
Retail, Pricing Strategy, Promotions, Time-series data, Lasso, Adaptive Lasso, Bootstrapping, Genetic Algorithm. |
| Abstract [eng] |
Effective promotional activities in retail business boost sales and obtain advantages over competitors. Purchase behaviour in terms of promotions can be analyzed from a Stock-Keeping-Unit (SKU) within the category perspective, considering SKU own-effect, cross-SKU effect, and stockpiling. Initially, following existing methods Autoregressive Distributed Lag (ADL) model estimated with a two-stage sign-constrained Lasso regularization method, coupled with Genetic algorithm (GA) for promotion schedule optimization. By introducing techniques such as Adaptive Lasso and Bootstrapping, the study proposes sales demand models and optimization models modifications. The flexibility of the demand model, evaluated through sign-unconstrained second-stage estimation representing cross-SKU effects within the category, leads to both substitutive and complementary effects across goods in the same category. Empirical applications on two categories indicate accurate sales forecasts, while the optimization part proposes profit lifts of 20.8% and 80% across planning horizons of two and four weeks, respectively. Managerial insights are presented through the visualization of computed own-price and cross-price elasticities. |
| Dissertation Institution |
Vilniaus universitetas. |
| Type |
Master thesis |
| Language |
English |
| Publication date |
2024 |
