Research On Product Upgrade Decision In The Presence Of Strategic Consumers

With the advancement of technology and the reduction of market entry threshold,the competition among enterprises is intensifying,and the homogenization of products becomes more and more serious.In order to retain old consumers,attract new consumers,increase sales revenue and profit,more and more enterprises choose to upgrade their existing products to maintain their attractiveness in the market,which is especially common in the market of electronic products,such as smartphones and mobile devices.At the same time,frequent upgrades have made more and more consumers more rational.They often take future expectations into account when making purchase decisions,so as to make a more strategic purchase choice.The consumer's purchase decision is easily influenced by the service life of the product.A longer service life can enhance the company's brand reputation and then attract consumers to purchase.And with the rejuvenation of consumer groups,consumers are increasingly pursuing new technologies and paying more attention to the functionality of products.Therefore,when dealing with strategic consumers,the service life of the product and the improvement degree of the product function should be taken into consideration in order to make the appropriate product upgrade decision and maximize the profit of the enterprise.In this paper,we regard an enterprise as the research object that intends to launch a generation of smart phone products with adopting a dual rollover strategy(that is,it will continue to supply the old version of the product to the market at a lower price while introducing new products),to explore the enterprise's upgrade decision problems,including product pricing and optimal upgrade level decisions.Firstly,the optimal pricing decision of upgrade product under the condition of product life is studied.On the basis of analyzing the impact of product life on consumer buying behavior,we construct a two-stage decision model of the enterprise,and then obtain the optimal pricing of the enterprise generation product through the model.The result shows that when an enterprise provides an upgraded version of the product,there is a threshold for the service life of the product.Only when the service life of the product exceeds this threshold,the enterprise should provide a discounted price of the initial version of the product in the second stage for consumers.In addition,the two-stage total profit of the enterprise is also affected by the launch time of the new product.The enterprise should set reasonable time-to-market for new products based on the product's useful life to obtain maximum profit.On this basis,the optimal product upgrade degree decision under the condition of considering product upgrade cost is studied.In this part,based on the relationship between the degree of product upgrades and the value depreciation rate,we divide the enterprise's upgrade strategy.The level of product upgrade is not lower than the value depreciation rate,which is called a large upgrade strategy.Otherwise,it is called a minor upgrade strategy.Through the establishment of a two-stage game model,the optimal pricing decision and upgrading level decision under the high level upgrade strategy and the low level upgrade strategy are obtained.And to compare the profits under these two strategies respectively,we obtain the conditions for the enterprise to adopt the minor upgrade strategy or large upgrade strategy when release new version product.