Authors:
Jarod Vanderlynden
1
;
2
;
Philippe Mathieu
1
and
Romain Warlop
2
Affiliations:
1
Univ. Lille, CNRS, Centrale Lille, UMR 9189 CRIStAL, F-59000 Lille, France
;
2
fifty-five company, 5-7 rue d’Athènes Paris, France
Keyword(s):
Consumer’s Behavior, Agent-Based Model, Simulation, Marketing, Pricing Strategy.
Abstract:
Discounts in stores are a powerful tools companies can use to create brand loyalty for products or increase sales during a short period of time. However, discounts are costly campaigns that result in complex effects on consumers, yielding unpredictable results and returns on investment. To maintain competitiveness, stores and brands have to use those campaigns and risk substantial investments. To gain a better understanding of the impact of discounts on consumer behavior, we argue that it is necessary to complement aggregated solutions with more granular, individually-centered approaches, such as agent-based modeling. In our study, we propose a new model based on social and psychological findings capable of replicating important and well-known emergent phenomena. This simulation model permits the study of behavioral responses to discounts and price strategy and can help companies to gain a clearer understanding of the effects of their different campaigns.