Pricing Strategies For Products In Crowdfunding And Retailing

With the rapid development of product-based crowdfunding in the world,the new business model has made a dramatic change for the relationship of enterprise-productcustomer,as well as the traditional mechanism of funding and retailing.Whereas,there has been scant academic research.This dissertation,through case analysis and empirical studies,is devoted to filling this gap by investigating product-based crowdfunding from three levels,say,individual level,firm(or product)level and industry level,respectively and systematically.Based on the observation of practice,the literature review,and the preliminary statistics,this study summarizes the typical business model of crowdfunding which is widely adopted by crowdfunding platforms such as Kickstarter.Besides,focused on one of the most successful project on Kickstarter,Pebble Smartwatch,this study also analyzes its crowdfunding and advertising strategies and concludes with the quote: A successful project should be aimed to develop as powerful a product as possible,at a price point that makes it accessible and appealing to as many people as possible.After that,this paper analyzes the consumer behaviors and present them in two aspects: first,the main purpose of consumers in crowdfunding is to get the reward of product,which means the quality and price are their main concerns;second,consumers in crowdfunding also care about the relationship of their contribution and the success rate,whereas in the selling period they do not.According to the practical cases and consumer behaviors,it is meaningful to think about the related strategies,and therefore,three particular topics are studied in the following research of this dissertation.Firstly,consider a stylized two-period model,wherein heterogeneous consumers determine whether to pre-pay for the product in the crowdfunding period or to wait and buy the product in the subsequent selling period.The main results of the base model show that: 1)When the proportion of high-value consumers is lower,the firm tends to set a lower crowdfunding price while a higher selling price,otherwise he will price higher in crowdfunding.2)A higher proportion of high-value consumers will not necessarily increase the firm's expected profit.However,when the proportion of high-value consumers is high enough,a higher proportion means more profit for the firm with a higher crowdfunding price.Finally,the study extensively considers quality investment as a new strategy for the firm and obtains some interesting findings.If the firm wants to improve the expected profit via designing a higher quality of the new product,it will be effective only when the proportion of high-value consumers is high enough,and then the quality investment strategy could lead to a win-win result for both firms and consumers.Secondly,this dissertation studies a crowdfunding game wherein the firm first collects money through crowdfunding and,if it succeeds,then invests the raised money to fund the promotional activities via online retailing.Based on previous literature and the enterprise operational practice,three alternative pricing strategies are proposed,i.e.,low pricing strategy(L strategy),menu pricing strategy(M strategy),and high pricing strategy(H strategy).When faced with small market size,the firm tends to set a high price,but when it becomes larger he prefers menu prices or a low price to guarantee the success of the crowdfunding campaign.Moreover,when comparing two scenarios with or without considering advertising investment,the firm may never choose the low price once it cannot raise enough money for informative advertising;however,that can never arise if without considering the option of advertising investment.Finally,this study discusses a series of cost factors and show their influences on pricing strategies and profits in crowdfunding and retailing by mathematical analysis and numerical studies.Particularly,such costs include the production cost,the development cost,and the advertising cost.As the unit production cost varies,the expected profits will move upwards or downwards;however,for the development cost and the advertising cost,they both can change the creator's best pricing strategies under different market circumstances,which probably damage the development of the market.On one hand,the investigation of production cost and development cost reveals that firms prefer to discriminate consumers by pricing in crowdfunding and retailing if they face a high development cost,even though the price discrimination may reduce the success rate of crowdfunding.On the other hand,the discussion of production cost and advertising cost shows that a comprehensive impact induced by the costs,the market size,and the gap between consumers' valuations,will influence the firms' choices of the best pricing strategies.More importantly,when the end market size is very small,firms will change to more risky pricing strategies as the advertising cost increases from low to high.The more risky strategies can collect more funding with a lower success cost,therefore,it may not be a good choice from the perspective of consumers or the crowdfunding market.