Differential Pricing Strategies For Products Considering Heterogeneous Demand Under Various Market Conditions

With increasingly exhaustion of natural resources and gradually deterioration ofeco-environment, sustainable development of human economics has been severelyrestricted. And it has become an inevitable obstacle to deal with the problem how toprotect eco-environment and utilize the resource more reasonably. On this condition, inorder to achieve the purpose of saving resources and protecting the environment, manycountries have enforced regulations ordering manufacturing enterprises withresponsibility for the whole life cycle of their products. Due to the constraint ofregulations and stimulus of economic interests, more and more manufacturingenterprises have begun to implement the closed loop operation, which recycling andreusing the end-of-life products as well as making new products. There are newproducts and a variety of recycled products in the closed loop operation. How to adoptthe targeted optimal pricing strategies to maximize enterprises’ profits has become animportant problem concerned by entrepreneurs. Thus a certain kind of endurableelectronic product was considered in this paper, which including three different states ofnew, remanufactured and refurbished (a kind of recycled product that reaches thespecified quality standard after the refurbishment process can be resold). Then theconsumers’ different value evaluations of the products were taken as the starting pointand the enterprises’ optimal pricing strategies under the different market environmentwere studied by using of the game theory.Firstly, the single-period static pricing strategy and two-period dynamic pricingstrategy were studied under the market circumstance of manufacturer monopoly. Theconsumer’s value utility functions were further extended considering the heterogeneousdemand characteristics of new, remanufactured and refurbished products. And then theproduct demand functions were put forward in different market demand situationsrespectively. On this basis, four production modes were proposed and the correspondingdifferential pricing strategies were studied under the single-period condition. And theseoptimal strategies were contrasted from different perspectives to show the internal runeffects and the growth effects. Then the two-period dynamic differential pricing modelswere established and the influences of the collection yield and the market growth rateon the dynamic differential pricing strategies were analyzed with the conditions ofinvariable and variable market size. Secondly, on the premise of promoting remanufactured and refurbished products,different advertising solutions were discussed and the influences of them on the optimalpricing strategies were analyzed. Three following advertising plans were considered:advertising only for remanufactured products, advertising only for refurbished productsand advertising for both of them. Then, according to the changes of value utility afteradvertising, the demand functions of products were adjusted, and the differential pricingmodels were built. Furthermore, the advertising solutions were contrasted from differentperspectives and some useful suggestions for manufacture’s advertising were putforward.Thirdly, under the competition condition of a remanufacturer with a manufacturer,the single-period static pricing strategy and two-period dynamic pricing strategy werestudied. Supposed that the remanufacturer engaged in remanufacturing and refurbishing,as well as the original manufacture only made new products. On this basis, fourdifferent competitive models of the remanufacturer were proposed and thecorresponding pricing strategies were studied. The external run effects and the profitappropriation phenomenon were analyzed. Then the two-period dynamic competitionmodels were established and the influences of the collection yield and the marketgrowth rate on the dynamic differential pricing strategies were analyzed with theconditions of invariable and variable market size.Moreover, the pricing strategy and coordination mechanism of the cooperationsystem consisting of a remanufacturer and a manufacturer were discussed. Supposedthat the manufacturer was regarded as a dealer of the remanufacturer to market theremanufactured and refurbished products, as well as made and marketed new products.On this basis, the optimal pricing strategies of the cooperative system were researchedunder the decentralized decision. Due to the efficiency loss of the decentralized decision,the optimal equilibrium solutions of the concentration decision were taken as thebenchmark to investigate the coordinating role of two different coordination contractson the cooperation system. And then under the disturbance environment, the optimalstrategies and coordination mechanism for the cooperation system were proposed.Lastly, aiming at a closed-loop supply chain consisting of a manufacturer, a dealerand a third-party recycler, the optimal pricing problems of different bodies engaging inrefurbishing were studied. Considering the dealer or third-party recycler also had thetechnical condition, besides the manufacturer, different optimal pricing models wereestablished. Then the run effects and the growth effects were analyzed, as well as the profit appropriation phenomenon. Finally, the different situations of refurbishing werecontrasted and some useful suggestions for the production choice of the closed-loopsupply chain were given.