Simultaneous consideration of consumer preferences and seller revenue as a smart retail sales and management strategy

Abstract

PurposeThe authors propose a dairy bundle, integrating strategies to jointly maximise producer revenue and consumer utility according to the latter's preferences.Design/methodology/approachAn algorithm based on a nested logit model identifies the bundle maximising producer revenue based on factors affecting consumer purchase behaviour. The data are drawn from a mall-intercept survey administered in Iran, with consumers stating a hypothetical choice among a comprehensive set of dairy products.FindingsDemographic characteristics and marketing mix elements significantly affect consumers' preferences. An algorithm based on the estimated dissimilarity parameter determines the best bundle of dairy products, simultaneously obtaining the highest utility and the highest expected revenue.Originality/valueConsumer preference and maximum producer or retail seller income are considered simultaneously. The bundling promotion strategy is widely used for food offerings and fresh foods and can be extended to other products.