Nikolay Osadchiy - Emory University, Goizueta Business School. Atlanta, GA, US

Nikolay Osadchiy Nikolay Osadchiy

Associate Professor of Information Systems & Operations Management | Emory University, Goizueta Business School

Atlanta, GA, US

Markdown Management and Shopping Behavior

 Markdown Management and Shopping Behavior 2018-07-30
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Nikolay Osadchiy

Consumers face the trade-off of immediately paying tag price for an item or waiting for a time when it might be marked down but out of stock. In new research, Nikolay Osadchiy, assistant professor of information systems & operations management, Manel Baucells (U of Virginia), and Anton Ovchinnikov (Queen’s U) argue that retailers can better optimize markdowns by paying more attention to this particular type of consumer behavior. The researchers approach the consumer waitor-buy decision as a “multidimensional trade-off between the delay in getting an item, the likelihood of getting it, and the magnitude of the price discount.” Those dimensions need not be independent; for example, the consumer patience (or sensitivity to delay) could depend on the magnitude of markdown. By optimizing the model, they find that retailers can substantially increase revenues by offering larger markdowns than the current state of the art suggests. In the experiments involving business school students as well as Amazon Mturk participants, which is an on-demand, scalable workforce, the trio found that the expected revenue gains are between 1.5% and 2%.


Osadchiy Discusses Research on Buying Decisions, Markdown Strategy

According to operations research, retailers can increase market size and revenues by better understanding the factors that go into a buyer’s decision-making process.