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Game theory modelling of retail marketing discount strategies

Mark Taylor (Department of Computer Science, Liverpool John Moores University, Liverpool, UK)
Vince Kwasnica (Department of Applied Mathematics, Liverpool John Moores University, Liverpool, UK)
Denis Reilly (Department of Computer Science, Liverpool John Moores University, Liverpool, UK)
Somasundaram Ravindran (Department of Computer Science, Liverpool John Moores University, Liverpool, UK)

Marketing Intelligence & Planning

ISSN: 0263-4503

Article publication date: 21 March 2019

Issue publication date: 19 July 2019

Abstract

Purpose

The purpose of this paper is to use the game theory combined with Monte Carlo simulation modelling to support the analysis of different retail marketing strategies, in particular, using payoff matrices for modelling the likely outcomes from different retail marketing strategies.

Design/methodology/approach

Theoretical research was utilised to develop a practical approach for applying game theory to retail marketing strategies via payoff matrices combined with Monte Carlo simulation modelling.

Findings

Game theory combined with Monte Carlo simulation modelling can provide a formal approach to understanding consumer decision making in a retail environment, which can support the development of retail marketing strategies.

Research limitations/implications

Game theory combined with Monte Carlo simulation modelling can support the modelling of the interaction between retail marketing actions and consumer responses in a practical formal probabilistic manner, which can inform marketing strategies used by retail companies in a practical manner.

Practical implications

Game theory combined with Monte Carlo simulation modelling can provide a formalised mechanism for examining how consumers may respond to different retail marketing strategies.

Originality/value

The originality of this research is the practical application of game theory to retail marketing, in particular the use of payoff matrices combined with Monte Carlo simulation modelling to examine likely consumer behaviour in response to different retail marketing approaches.

Keywords

Citation

Taylor, M., Kwasnica, V., Reilly, D. and Ravindran, S. (2019), "Game theory modelling of retail marketing discount strategies", Marketing Intelligence & Planning, Vol. 37 No. 5, pp. 555-566. https://doi.org/10.1108/MIP-11-2018-0489

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited