Pricing And Contracts In The Presence Of Consumer Behavior

The key to the success of a firm lies in correctly understanding and grasp consumer behavior. Incorporating consumer behavior into firms’marketing strategies has received much attention from practitioners and scholars. In particular, with the development of Internet Technology and Electronic Commerce, consumer behavior becomes increasingly complex due to the easy accessibility to information, bringing new challenges to firms’marketing activities. Under such new business environment, investigating pricing and coordination in the presence of consumer behavior is the main theme of this dissertation.Starting from the problems in the pricing and supply chain coordination practice, this dissertation explores the impact of consumer behavior on the firms’sales, then utilizes the game theory to analyze the firms’optimal pricing decisions and supply chain coordination mechanism under various marketing conditions.Main contents of this dissertation are as follows:Firstly, Chapters3and4study the pricing problem in the presence of the myopic consumer. Chapter3proposes a two-period pricing model with a price reduction for a supply chain consisting of a single manufacturer and a single retailer. This chapter analyzes the impact of price reduction on consumer decisions from the perspective of reference price. Specifically, this chapter firstly considers the scenario that the two channel members integrate together, then examines the following three scenarios, i.e. the N-Scenario (no quick response ability), the F-Scenario (full quick response ability) and the L-Scenario (limited quick response ability). This chapter not only illustrates the impact of reference price effects on the price decisions of the two channel members, but also shows the benefit of a supply chain’s quick response ability and also introduces some contacts to coordinate the supply chain.Chapter4incorporates both the reference price effect and the online word of mouth effect into a two period pricing model for a new product introduction, to analyze their influences on a firm’s pricing strategy for new product launching. This chapter gives the optimal pricing strategies for the firm under different conditions and proves that price discrimination is necessary for the firm when the online word of mouth effect is relative large.Then, Chapter5extends the research framework from myopic consumers to strategic consumers. Specifically, the express delivery industry is often overloaded in some hot online selling seasons, which causes consumers’dissatisfaction. Under such a circumstance, the e-retailer can utilize two opposite strategies, i.e., to setup either a low price with a pre-announced markdown pricing (PMDP) strategy, or a high price with a pre-announced markup pricing (PMUP) strategy for the hot selling period. As both the prices and the express service quality are different between the regular period and the hot selling period, consumers can strategically choose their purchase time. This chapter proposes a two period pricing model in which the selling season are divided into regular and hot selling period, and all consumers are assumed to be strategic. The e-retailer determines the prices over the two kinds of periods to maximize its profit. The derived results show that a PMUP (resp. PMDP) strategy is preferred when the overloading degree in the hot selling period is slight (resp. heavy). This chapter also extends the model by incorporating the competition of traditional retailers.Chapter6introduces consumer behavior into the express service supply chain. It starts with a newsvendor seller who controls both the retailer and the express company facing random consumers. The seller initially installs quick response capacity and charges a price for the product. Consumers anticipate future delivery delay risk and buy the product if they have a positive surplus. This chapter derives the rational expectations equilibrium in this centralized case. Then it proves that displaying the information on quick response capacity can improve the centralized firm’s profit. However, this strategy may not be feasible because consumers may not believe this information. Lastly, the chapter examines the decentralized case with time-insurance contract and option contract respectively. Results show that a time-insurance contract or an option contract is able to make the decentralized supply chain achieve the profit in the centralized case under information display.Whereas existing work restricts attention to the case that the strategic consumers fall in recognizing their integrated influence on the market, Chapter7considers although the demand of an individual consumer is so small that it could be negligible, the integrated impact cannot be ignored. With this consideration, this chapter studies the impact of strategic consumers on a newsvendor seller’s pricing problem.The main innovations and contributions of this dissertation are summarized as follows:(1) This work links practices and theoretic analysis closely. It not only extends the current research scope of consumer behavior, but also provides theoretical foundation for managers in practice.(2) The third chapter of this dissertation analyzes the impact of reference price on the supply chain member’s decisions in three scenarios with different degrees of quick response capacity. This analysis explores the quick response capacity from a new perspective. Besides, this dissertation also proves that the revenue sharing contracts can coordinate a supply chain with new characteristics, i.e. a price reduction and reference price effects happen during the selling season.(3) Being different from the most previous analytical research that formulates the reference price effect by a market-level model, this dissertation models it in an individual consumer level and derives the market sales volume based on the consumer choice model.(4) Under the new circumstance where various kinds of social media platforms emerge, the fourth chapter firstly incorporates the word of mouth effect and the reference price effect into a new product introduction model, to analyze their influences on a firm’s pricing strategy for new product launching.(5) Based on practical problems encountered in the system consisted of e-retailers and express companies, Chapter5firstly investigates the online hot selling season and its impact on e-retailer’s pricing strategies. Chapter6studies the impact of strategies such as displaying quick response capacity information and adopting some contracts, on the performance of the express service supply chain. Particularly, while the time-insurance contract is newly applied in the express industry, it has never been studied in academic. This dissertation is the first paper to explore the time-insurance contract about delivery time from the perspective of academic.(6) The seventh chapter of this dissertation firstly considers the impact of strategic voting consumers and gets new insights.