The impact of sales effort on a dual-channel dynamical system under a price-sensitive stochastic demand

Abstract

Sales efforts play a crucial role in dynamic retail management and can have a significant impact on the overall success of a retail business. The primary goal of sales efforts is to generate revenue. By effectively promoting and selling products or services, sales teams can drive sales and increase the company's revenue. Demand of products play a critical role for retailing sector and demand cannot be predicted perfectly in reality. Owing to this situation, a dynamical system with dynamic sales effort and price-sensitive stochastic demand is proposed in this study. A dual-channel (online & offline) is considered in this study to provide the best consumer experience. Contradictory to the existing literature, geometric Brownian motion under a fuzzy environment is utilized to handle the dynamic price situations, which is solved through the Black-Scholes equations. The effect of preseason cost on the optimal results is analyzed. To validate the study, a numerical analysis of the dual-channel retailing system is presented with optimal selling price, sales effort, and profit under stochastic demand. Sales efforts have a profound impact on dynamic retail management. They drive revenue generation, customer acquisition and retention, inform inventory management decisions, provide market insights, contribute to competitive advantage, align with marketing strategies, and enable performance measurement and improvement. From the findings, it is clear that sales effort can provide 0.02% higher profit per cycle in a dual-channel retailing.