Product Design,Rebate And Pricing Strategy With Consumer Behavior Consideration

Information technology provides more access to information for firms and consumers,and reduces the cost of information acquisition.In internet,firms can learn a lot of product attributes from consumers' perspectives,have a better understanding of the market structure.And consumers can get more product information,reduce uncertainty.Consumer behavior plays a critical role in firms' operation management.Operation management with consumer behavior consideration has attracted more and more attention of scholars and business managers.Together with increasing attention paid to environment,more consumers prefer sustainable products to fulfill their preference of environmentally friendly products during shopping.Sustainable product strategy becomes popular in supply chain management to meet consumer preference.Consumers are relying on the online customer reviews to access to more product information and make smarter purchase decisions.Also,firms learn about consumer preference and market structure through online customer reviews.How to stimulate consumers to provide online customer reviews has become a critical issue for firms.In this thesis,we focus on these questions:In this paper,we present the product sustainable level and explore the optimal strategic practice for sustainable product strategy of firms by constructing a theoretical framework.First,we consider a scenario that all consumers are environmentally conscious.We find that the product sustainable level is determined by the trade-off between profitability and costs of the sustainable product.When adopting sustainable product strategy,the firm has incentive to charge a higher price due to two effects: additional cost effect and extra consumer surplus effect.Although a sustainable product has a higher cost than a regular product,it also has higher marginal profit because of its high price.Therefore,the firm is better off to adopt sustainable product strategy.Second,we consider environmentally conscious consumers and regular consumers coexit in the market.Environmentally conscious consumers get positive additional utilities from sustainable products,while regular consumers obtain non-positive additional utilities from buying sustainable products.So,the firm has to balance the pros and cons to determine its sustainable level.The firm adopts sustainable product strategy only when the expected additional consumer utility of a sustainable product is positive.There are two effects: demand expansion effect and profitability effect,which drive the firm to adopt sustainable product strategy.And,the firm should adopt a higher sustainable level when there are more environmentally conscious consumers in the market.We further consider that the firm manages consumer segmentation by advertisement.We find that when converting regular consumers to be environmentally conscious is not costly,the firm will great efforts to convert all consumers to be environmentally conscious;otherwise,the firm will convert part of consumers to be environmentally conscious.We consider the impacts of consumers' review behavior from the perceptive of supply chain.We build up a two-period theoretical model with taking account of these information interactions,and study the firm's optimal rebate strategy and product pricing strategy.Based on the study of rebate strategy,we further consider the impact of consumer additional review behavior on operation management.We find that adopting rebate strategy not only improves consumers' utilities,but also expands the market demand in the two periods.These two effects lead the firm to gain more profits through adopting rebate strategy.The review effort plays a critical role in determining the firm's rebate decision and pricing decisions.When the review effort is small,it is efficient for the firm to set a higher rebate value to persuade consumers to provide online customer reviews,and charge for a higher product price in the first period to extract more profit.When the review effort is high,the firm's willingness of adopting rebate strategy is not strong,the firm will reduce the rebate value and lower the prices in the two periods.Our findings indicate that it has critical influence on pricing by consumer additional review behavior during product recognition processWe consider consumers' behavior during the process of product design,rebate strategy and pricing.There are some contributions for the reseach of operation management.(i)Presenting the product sustainable level and considering consumers' environmental consciousness during the product design process are a beneficial supplement to the sustainable theory.(ii)Considering the impacts of online customer reviews on consumers' purchasing decisions and firm's operation management expand the research perspectives of online customer review.(iii)Analyzing the impact of consumer additional review on product pricing enriches the research of online customer review.