Burak Gökgür is a fourth year Ph.D. student in Operations Management and Information Systems at the Graduate School of Business, Koç University. He received his B.S. degree in 2010 and M.Sc. degree in 2013 in Industrial Systems Engineering from Izmir University of Economics. His research interests include retail operations and supply chain management.

Dynamic Pricing of Targeted Bundle Offers

Bundling is the practice of offering two or more products as a single unit and at a price that is lower than the sum of the individual prices of the products. To create forward-buy incentives for their customers, along with other types of promotional discounts, retailers rely on bundle offers formed with products from various categories. To increase the effectiveness of their promotional offers, particularly in consideration of the expanding product assortments and the widening differences in consumers’ preferences, retailers design segment-specific (or targeted) promotional offers. We study the segment-specific pricing problem in a setting where a retailer aims to clear the excess inventory of a slow-moving item with a bundle offer. We investigate the question of how the segment-specific bundle pricing decisions depend on the inventory level of the slow-moving item and the timing of the bundle offer. Moreover, through a numerical study, we explore the revenue impact of targeted bundle offers