A two period pricing model for new fashion style launching strategy

There is a trend in fashion product industry that firms launch new styles of their products more frequently. To investigate the optimal style launching strategy for a fashion firm, we propose a two-period pricing model for a fashion product firm. The firm sells a style of products in the first period as well as that he may utilize three different strategies in the second period, i.e., (i) the N-Strategy: the firm does not launch a new style; (ii) the S-Strategy: the firm launches a new style and stops selling the previous one immediately; and (iii) the D-Strategy: the firm sells the new and old style simultaneously in the second period. Different from previous literatures, we incorporate the satiation effect of consumers in our model and try to analyze its impacts on the fashion firm׳s new product launching strategy. Specifically, we assume that a consumer occurs a certain mental book value cost x if he/she has already purchased a previous style of the same brand.