Advance Selling at Hierarchical Consumer Market

Advance selling has become an important marketing practice in many industries, and been already an important area of study. In this paper, we characterize joint optimal selling and pricing strategy for a seller whose target customers' valuations comprise uncertainty over time. The results indicate that advance selling is the dominant marketing tool in a homogeneous consumer market if the marginal cost is not too high, but in the hierarchical consumer market, pure advance selling is never the best choice, a blend model or pure spot selling is the optimal method according to different market structure.