Dynamic Pricing Strategy Based On The Quality Of Products And Services

Dynamic pricing is one method of revenue management, which is the practice of charging different prices to different consumers or different market segments for similar goods according to market demand and supply capacity, so that enterprises can maximize the revenue. With the development of Internet and information technology and data analysis tools and decision support tools, dynamic pricing technology has been widely used.In the fierce market competition, the service capacity and service quality are important indicators of the enterprise development. Improving the service capacity and service quality is also the best way to increase value-added products and to differentiate development strategies. High-quality services can help to improve consumer satisfaction with the product and purchase rates, lower price sensitivity, and ultimately increase product sales target to gain maximum benefit. It can be said that the service factors play a crucial role in the implementation of product pricing strategy. However, quality of service and market environment factors is often neglected in the actual pricing process, leading to irrational pricing. Therefore, adding service considerations into product dynamic pricing strategy and developing a more scientific and reasonable price not only has a certain theoretical value but also has a strong practical significance.The paper uses service quality as a decision variable, starting from the two aspects of service quality and market environment, using dynamic programming and repeated game method based on dynamic pricing theory and service theory to build services cost function and demand function, and then to establish the dynamic pricing model. Then product dynamic pricing model is applied to both monopoly market and competition market to analyze the dynamic pricing problem though simulation example, and get the following conclusions:1. In complete monopoly market, with the changes of the time, the products dynamic pricing shows a certain regularity of specific performance:(1) Product pricing has the characteristics of the oscillation. In short term, the product prices fluctuate, but in the long run, prices will be infinitely converged to a constant;(2) With the number of time cycles tending to infinity, the price limits will be converged to customer’s reservation price or product unit cost;(3) With the continuous passage of time and the product unit costs getting lower, the price of the product still has the characteristics of the oscillation and its trend is declining along a curve oscillation.2. In competitive market, the products dynamic pricing shows a certain regularity of specific performance:(1) When there is no competition of service quality between two competing enterprises, the balanced service level will increase with the increase of intensity of price competition, and the equilibrium price will decrease with the increase of intensity of price competition;(2) When there is competition of service quality between two competing enterprises, the balanced service level and the equilibrium price will be affected by service cost factor, initial service level and initial price;(3) In the case of different service cost factor, initial service level and initial price, prices will oscillate and be converged to the constant or show the divergent trend.3. There are three pricing strategies according to the above pricing regularity in different market environment:raising price, lowering price and maintaining the original price.(1) When there are good market prospects and the service level is reasonable and the product is well-selling, raising price is reasonable;(2) When he service level is low and the initial price is not reasonable, lowering price is reasonable;(3) When the product is neither well-selling nor blocked by consumers, maintaining the original price is reasonable. Therefore, the level of service quality affects the pricing strategy of the enterprise to a certain extent.