Revenue Management When Consumer Learning Online

Today, consumers have been getting smarter. Sellers have been engaged in a "cat and mouse" game with consumers, they hope consumers purchase more products at a high price. Thus, sellers use advertising, dynamic pricing, inventory allocation strategies to increase revenue. On the other hand, consumers always want to buy higher quality with lower price. In order to realize the maximum of utility, they would learn more information, find more potential sellers and wait longer time before they make the decisions.With the rapid development of network information technology and e-commerce, consumers could find more approaches to behave strategically. Though Internet, consumers can know the price, sales volume as well as positive and negative reviews information about the product, sales or brand. The topic of strategic behavior in this thesis is not limited to the strategic waiting in the actual purchase process, but covers strategic learning behavior of consumers in the purchase decision process. The main content of this paper is as follow:Firstly, this thesis identify consumers how to clarify reserve price for a product by online learning product reviews when they have uncertain value. Differ from previous research about word-of-mouth, consumers learn the negative word-of-mouth information about the product in this thesis, this assumption is more in line with reality in the consumer buying behavior. The online reviews learning, consistent with the changes in consumer behaviors that driven by the development of e-commerce, but also highlights the difference between online reviews learning with interpersonal word-of-mouth.To the strategic learning of consumers, based on e-commerce in reality, the sellers will put in positive reviews to enhance consumers’reservation price for the product. We study the decision-making mechanism of sellers as well as word-of-mouth marketing decisions that carried by third party network media, and make a corresponding comparative analysis by numerical simulation. Secondly, when consumers identified product reservation price, we continue to study consumers learning about sellers’sales volume and strategic waiting for markdown. When valuations greater than price, the myopic consumers will buy product immediately, but the strategic consumers will expected the possibility of get products at lower stage, and decide to whether to wait until the price is low. In this thesis, when consumers forecast inventory little, they would argue that it is impossibility to get product in second stage; conversely, when they forecast the inventory large, they wait until the price is low.This thesis extends the previous literature that sellers respond to consumer strategic behavior through single inventory allocation or dynamic pricing, and build a model that sellers use the means of inventory allocation and pricing simultaneously. We improved strict assumption of the existing extensive literature on "consumers only buy a product in the entire sales period", and assume that consumer demand is uncertain, and the consumer demand function is not only affected by the inventory forecast, but also affected by the product price. Sellers combined inventory allocation and pricing strategies so that they could respond consumers’ strategic learning and waiting behavior more effectively.