Research On Substitutes Inter-temporal Pricing With Considering Strategic Consumer Behavior

Inter-temporal pricing as an important technology of revenue management can significantly increase revenue for retailers on one hand,and also make more and more consumers become strategic on the other hand.Consumers choose when to buy in order to obtain more surplus.This strategic purchase increase the difficulty for retailers to use inter-temporal pricing strategy especially when the products are substitutes.When deciding the inter-temporal price of substitutes,the retailer need to consider both the alternative choice between substitutes and the inter-temporal choice in purchase time.So the inter-temporal pricing research on substitutes with considering strategic consumer behavior not only can help retailers to increase their income,but also can supplement the inter-temporal pricing theory,and has important practical and theoretical significance.Current research around this problem is relatively scarce.This paper studies the inter-temporal pricing of substitutes respectively in monopoly and competition market both in the case that product is enough and the case product is limited.Firstly,in the case that product supply is sufficient and myopic and strategic consumers coexist in market,we study the inter-temporal pricing of a monopoly retailer that sells substitutes.The results show that the larger the proportion of strategic consumers,the lower the price of two products in two stages and the smaller the price discount.The influence of the strategic consumers on the profit of the retailer depends on the quality of the two products,the value discount factor of the consumers and the proportion of the strategic consumers.The influence of strategic consumers on the profit of retailer is not absolutely negative,and the profit of the retailer can be increased under certain values of parameters.Secondly,in the case that product supply is sufficient,based on consumer strategic behavior we study the competitive pricing between a leading retailer that sells innovative products and a following retailer that sells imitative products.The quality of imitative products can be inferred before the sales start.The results show that the leading retailer gets more profit than the following retailer with the first-move advantage.Compared with myopic purchasing behavior,strategic purchasing behavior reduces the two-stage price of innovative products,the price of the imitative products and the profit of the leading retailer.However,strategic purchasing behavior may increase the profit of the following retailer under certain circumstance.Thirdly,in the case that product supply is sufficient,based on consumer strategic behavior we study the competitive pricing between a leading retailer that sells innovative products and a following retailer that sells imitative products which quality is uncertain before the sales start.As the quality of imitative products increase,our analysis found that the profit of the leading retailer and the pricing of the second stage both decrease,the pricing of the first stage is fixed,and the profit and pricing of the following dealer increase at first and then decrease.In particular,the unit profit of the two products and the profit of the following retailer tend to be 0 when the quality of imitative products nearly equal to that of innovative products.The research also shows that the profit of the leading retailer is greater than that of the retailer.Fourthly,in the case that product supply is sufficient,based on consumer strategic behavior we study the inter-temporal pricing of substitutes in the context that consumers have several kinds of product demand.The results show that consumer demand constitute directly affect the profit and inter-temporal pricing of retailer.With the number of consumers who only need high quality products increasing,the pricing in the first stage decreases,and both the pricing in the second stage and the profit of retailer increase.The price of low quality products increases at first and then decreases in the first stage,and it decreases at first and then increases in the second stage.With the number of consumers who only need low quality products increasing,the pricing in the second stage increases,and both the pricing in the first stage and the profit of retailer increase.The price of high quality products increases at first and then decreases in the first stage,and it decreases at first and then increases in the second stage.Fifthly,in the case of limited product quantity,the inter-temporal pricing of substitutes is studied based on consumer strategic behavior respectively in monopoly and competitive market.The research shows that in the monopoly market,the impact on retailer's profit because of the change of high quality products is bigger than that of low quality products.With the increase of the initial quantity of any product,both the two-stage pricing decrease,and the retailer's revenue increases first and then decreases.In the competitive market,with the increase of initial quantity of any product,the revenue of the product's retailer increases first and then decreases,and the profit of the competitive retailer decreases.Both retailers' two-stage pricing decrease.Finally,in the case that the product quantity is limited and consumers have different product demand,the inter-temporal pricing of multi-product in the network revenue management is investigated based on the consumer strategy behavior is studied.We study the competitive pricing between retailer 1 who sells product 1 and product 2 and retailer 2 who sells product 3.Product 3 and “product 1 +product 2” are substitutes.Research shows that the increase in initial quantity of any product decrease the price of the three products.The numerical simulation shows that as the initial number of the product of any retailer increases,the revenue of his competitor decreases,and his own revenue increases first and then decreases.When the proportion of consumers who only need product 1 increases,the two-stage price of product 1 increase,while the two-stage price of product 2 and product 3 both decrease.The revenue of retailer 1 increases,and the profit of retailer 2 decreases.When the proportion of consumers who only need product 2 increases,the two-stage price of product 2 increase,while the two-stage price of product 1 and product 3 both decrease.The revenue of retailer 1 and retailer 2 both decrease.