Study On Dynamic Pricing Strategies Of Electronic Firms With Reference Effects

With the development of Internet and technology,the sales of high-tech products have risen sharply.The value and property of electronic products will reduce due to the features of them,so the pricing strategies of electronic products are different from other normal products.Therefore the price of high-tech products must be measured by the demand of the market instead of marginal cost or average cost.And the pricing mechanisms of the electronic companies are more flexible,which reduces the degree of asymmetric information between electronic companies and customers.For the customers,E-commerce platform are more convenient for them to view electronic products,compare prices,check the inventory quantity,purchase products,fill in the evaluation feedback and so on.Market information is becoming more and more transparent,and at the same time the decision-making behavior of consumers is becoming more and more rational.They will form the reference price on the basis of historical price,competitive price,the rate of obsolescence and other kinds of factors.They will forecast the future price at the same time,then they will determine whether the present purchase can gain maximum benefit.For the electronic companies,the Internet is a double-edged sword.On one hand,the development of mobile client enables users to browse a large amount of information without leaving home,expand product demand and greatly improve the sales of the products.On the other hand,the openness of information enables consumers to compare with the reference price and make the most favorable decision.How to take the dynamic pricing strategy and make maximum profit is important for electronic companies.In this paper,the third chapter analyzes consumer purchase decision with the effect of the reference price by building a two-stage model and leading three variables,which are the consumers' sensitivity of the rise or fall of the price,positive effect of evaluation and so on.We also analyze the reference effect on the consumer utility.We also divide consumers into two kinds,which are short-term consumers and strategic consumers.We found the following results by research:When the proportion of strategic consumer is small,the optimal strategy for the electronic companies is not to differentiate them and adopt skimming pricing strategy;When the proportion of strategic consumer is large,adopting different pricing for the electronic companies is optimal.The fourth chapter investigates the pricing decisions of the enterprise under the effect of reference price.This chapter focuses on three different pricing strategies:(1)The skimming pricing strategy,the electronic enterprises take high price strategy in the first stage to attract customers with high quality before other similar products in the market launching and get back most of the cost.During the second stage gradually lower the price to attract more customers and take over a larger market share;(2)The penetration pricing,the electronic enterprises take low price strategy in the first stage to enter the market at the cost of losing part of the profits.Later they will increase the price gradually when consumers rely more on the products and the share is steady.(3)Fixed price,the enterprises keep the price of the product is fixed in every stage.Meanwhile,on the basis of the hypothesis of the third chapter,we discuss how the electronic companies gain the largest sales and profits during different stages by taking the proper pricing strategy.This kind of model can more fully simulated the real electronic products market and the two-stage pricing model can better reflect the importance of time in the special effect of electronic product pricing on the consumers.The fifth chapter studies how the electronic companies choose the strategy of new product launch under the effect of reference.There are three kinds of new product launch and price adjustment strategy:(1)the N-Strategy,which means the enterprise choose not to launch new products,but with a discount price continue to sell the old products.(2)S-Strategy,refers to the enterprises choose to launch new generation product,but at the same time to stop selling the old products.(3)D-Strategy,refers to the enterprises to select new generation products,and continue to sell at a discount of old products.By comparing the sales and profits of the three different strategies,we will give a optimal strategy and its applicable areas respectively.Finally,the paper summarized the results of present research,at the same time,it also points out some shortcomings in this paper and the direction of future research.The conclusion of this paper has enriched the related theory and practice of reference effect and pricing strategy.Meanwhile,we provide many targeted suggestions for the electronic enterprises on how to take dynamic pricing strategies with the reference effect.