Research On Pricing Strategy Of Firms Based On Internet Word Of Mouth And Its Updating Considering Consumer Behavior

As a result of the rapid growth of the Internet and e-commerce,consumers are no longer passive recipients of product information from merchants,but rather active contributors to the release of product content,giving rise to the Internet word-ofmouth(IWOM)sales model.In recent years,IWOM has gradually become the main reference basis for consumers’ purchase decisions and a key factor in the success or failure of Internet sales platform marketing.Notwithstanding,with the vast amount of IWOM data on social networking sites,how consumers can make purchase decisions in a short amount of time based on the vast amount of data,and how manufacturers can identify the pros and cons of the IWOM dissemination process,are all issues that require the attention and consideration of modern marketing management.In addition,the complexity of social network structure and the diversity of consumer behavior present formidable obstacles to the study of IWOM.In light of this,this paper investigates the impact of IWOM and its updates on consumers’ purchase decisions and firms’ pricing decisions from two different perspectives: transfer costs and upfront demand due to consumer utility maximization;and individual consumer behavior characteristics such as strategic consumption and preference differences.The third and fourth chapters,respectively,examine the intrinsic mechanism of IWOM diffusion in terms of transfer costs and strategic consumption.The fifth and sixth chapters investigate the intrinsic mechanism of IWOM updates in terms of pre-demand and preference differences,respectively.First,an examination of corporate pricing strategies in light of the Internet wordof-mouth effect and transfer costs.In a social network with IWOM,a two-stage Stackelberg pricing game model is constructed for the market entrant and the market incumbent.In the initial phase,consumers maximize utility by purchasing existing products and posting word-ofmouth information via online platforms.In the second stage,customers who continue to purchase the existing product will start receiving the utility value added by IWOM,while those who switch to the new product will incur transfer costs.In addition,the effects of both strategic and non-strategic pricing structures on pricing,market share,and profitability are analyzed,and the equilibrium of the market is determined.The results indicate that the combined effect of IWOM and transfer costs impede the market entry of new products.Under strategic pricing,the first entrant captures share in the market in the first stage with low prices and low profits,which leads to a greater IWOM effect in the second stage and increases the competitiveness with the later entrants,resulting in greater total gains,so taking a strategic decision is always preferable to a non-strategic decision for the first entrant.Given the IWOM effect and transfer costs,the strategic behavior of the first entrant makes it more difficult for the late entrant to enter the market.Second,a study of corporate pricing strategies under the Internet word-of-mouth effect considering strategic consumptionIn the sale of products with IWOM,a two-stage Stackelberg game model in which two firms enter the market successively is constructed.we consider the effects of three strategic decision patterns of first entrants and consumers on firms’ pricing,market share,and profits,and discusses the effects of consumers’ strategic behavior on firms’ pricing decisions and how firms respond to strategic customers through strategic pricing.The results show that in accordance with the strategic firm facing strategic consumers)decision model,the initial entrant implements cross-cycle pricing and ultimately achieves maximum profits.As the first entrant’s followers,the later entrant will also achieve the maximum profit under the model.In the non-strategic firm facing strategic consumers)decision model,due to the strategic consumers,the decision-making behavior of the first entrant is severely weakened,making the first entrant obtain the lowest profit,but at this time,to a certain extent,it also enhances the competitiveness of the later entrant,making its profit higher compared to the non-strategic firm facing non-strategic consumers)decision model.Third,a study of corporate pricing strategies under IWOM updates considering pre-demandWith the advent of the Internet,consumers are more likely to update their IWOM of products using online information for social learning before completing their purchase decisions.This paper incorporates Internet consumer behavior into firms’ competitive strategies and develops a two-stage market entry model which includes both regular and irregular consumers,with three market models of no data and information,demand only,and demand and IWOM,and investigates the influence of pre-demand and IWOM on the pricing decisions of incumbent firms and entering firms.The results indicate that in the demand-only information model,if there are enough irregular consumers,the incumbent firm will expand demand in the first stage through a small price reduction,thus increasing product quality updates in the second stage,which in turn will enhance competitiveness with the entering firm and allow for a significant price increase;in the market model with demand and IWOM information,consumers’ second stage purchase decision depends on the following three factors: a priori beliefs,demand and IWOM information.If the combined effect of these three factors leads to higher product quality updates,the incumbent firm becomes more competitive and can raise prices,while the entering firm is at a disadvantage,and vice versa.Consequently,the combined effect of demand information and IWOM means that the incumbent firm does not necessarily have a first-mover advantage,whereas the entrant firm may have a second-mover advantage under certain circumstances.Fourth,a study of corporate pricing strategies under IWOM updates considering preference differencesA two-stage model is constructed in a social network including fans and the general population,where fans and the general population are heterogeneous in terms of their preferences and expertise about the product.In the second stage,information about the product is provided by the consumers who have used the product in the first stage.Sellers produce products that include both quality and taste attributes and make decisions about information disclosure strategies before each stage of sales: taste information strategy(disclosing information about taste attributes only)or full information strategy(disclosing information about both quality and taste attributes).In the second stage,sellers’ information disclosure and pricing decisions are influenced by the following variables,according to the results: product cost,the amount of IWOM information,and the proportion of fans.Under certain conditions,the quantity of IWOM information and the disclosure strategy is alternatively or complementarily related,and sellers can increase the quantity of IWOM information in the second stage by lowering the price in the first stage to expand the market,or increase the total profit in both stages by delaying IWOM.The aforementioned four-part study on the impact of IWOM and its updates on corporate and consumer decisions enriches and refines the knowledge and understanding of the inherent communication mechanism of IWOM,and offers management decision-makers practical guidance on how to use IWOM for strategic pricing.