Dynamic Pricing For Perishable Products With Strategic Consumer Behavior

With the rapid development of product development technology and the fierce of the Market competition, product life cycles are becoming shorter and shorter. More and more products have the characteristics of perishable products. Perishable products (also called short life cycle products or seasonal products), have the characteristics:a short sales cycle, large market demand uncertainty, and low residual value in the end. Meanwhile, the development of the Internet allows consumers to obtain product information more convenient and comprehensive. Consumers are becoming more and more "smart". Strategy consumer buying behavior also brings significant challenges to the pricing decision of manufacturers. Therefore, the dynamic pricing of perishable products under consumer behavior has certain practical significance.This article is based on consumer utility function, discusses perishable product pricing strategies under consumer behavior. This paper mainly considers these factors that affect the pricing strategy:consumer behavior, risk preference and market competition. The study includes the following two parts. First, we study the impact of consumer behavior for pricing and revenue of manufacturers. Starting from consumer utility function, we build behavioral models, derive demand function and obtain optimal pricing strategies. Second, we study the impact of competition for pricing and revenue of manufacturers. We build dynamic pricing model under consumer strategic behavior and obtain consumer buying decisions in different situations and two manufacturers’ optimal pricing strategy.Through the study, we can find that:First, consumers’ strategic behavior has an adverse effect of profit. When consumers’ risk appetite increases and discount factor of consumers’ valuation becomes larger, consumer behavior affects revenue and pricing more seriously. Second, when the reference dependence increases, the consumers demand for the product in the second stage increases, the product pricing in the second stage increases. The product’s price in the second stage is a function of the price in the first stage and the reference price. Third, the difference between product quality difference coefficient and discount factor of consumers’ valuation determines consumers’ buying decisions. Strategic behavior of consumers affects revenue of the two firms. The firm which provides lower-quality products suffers more loss of profit than the firm providing higher-quality products.