Product categories, returns policy and pricing strategy for e‐marketers

Abstract

Purpose

The purpose of this paper is to provide a framework to help e‐marketers to find an optimal returns policy and pricing strategy in order to maximize their profits.

Design/methodology/approach

A profit‐maximization model is developed to determine the optimal returns policy and pricing strategy for e‐marketers.

Findings

The author demonstrates that an optimal returns policy and pricing strategy exists when firms sell products through an e‐market. When a firm uses an e‐market to sell its product, its optimal returns policy and pricing strategy is to offer a more generous returns policy and to charge a higher price when the product web‐fit is strong. Furthermore, the results also show that while the returns policy always is valuable for the e‐marketer, the value of returns policy increases with the product web‐fit.

Research limitations/implications

The present study assumed that all consumers have perfect information. However, information to the consumers could be incomplete. It is recommended that future research explores returns policy and pricing strategy under an incomplete information setting.

Practical implications

This paper provides a very useful model framework, returns policy and pricing strategy for business managers who are using or planning to use the e‐market to sell their products.

Originality/value

This paper fills a conceptual and practical gap for a structured analysis of the current state of knowledge about returns policy and pricing strategy in e‐business. The paper provides practical, solid advice and examples that demonstrate the application of the optimal strategies for e‐business managers.

Citation

Yan, R. (2009), "Product categories, returns policy and pricing strategy for e‐marketers", Journal of Product & Brand Management, Vol. 18 No. 6, pp. 452-460. https://doi.org/10.1108/10610420910989776