Joint Optimization of Multiple Products Positioning and Pricing

Abstract

This paper addresses a new product positioning problem, in which prices of the products are simultaneously determined in order to maximize both customer satisfaction and seller’s net profit. In this regard, customer willingness is identified with respect to the products within a family, upon which prices of the products are optimized so as to attain two objective functions: 1) maximizing customer satisfaction and 2) maximizing seller’s net profit. Despite of the literature body which has taken this problem into account for a single product, the developed model in this paper considers the case of a multiple products for different customer segments. To do so, an algorithm is developed which the considered problem is divided into a number of sub-problems solved by using GAMS and Matlab. Finally, a numerical example is illustrated.