The Study Of Corporate Pricing Strategy Based On Customer Loyalty

In recent years, along with the personalization of customer demands and the flexibilities of production, facing fierce competition, service enterprises have to seek for new approaches to gain competition advantages. The groups who receive such services always consist of the new and old customers. In order to gain more market share ratio, the enterprises should construct a strategy to maintain the old groups while recruit new ones. However, lots of enterprises aim at developing new markets and seeking for new customers, which means that more costs come into being. For loyal customers, they are willing to choose the products or services which they are satisfied with. Meanwhile, sometimes, the loyal customers can accept higher prices than new customers and thus can avoid the uncertain factors in the interactions between customers and enterprises. Now many enterprises have realized the significance of loyalty management, and start to build and maintain customer loyalty. We should consider the long-term benefits on maintaining customer loyalty. So it is worth considering that how customer loyalty changes the long-term competition strategy.Based on the above background and previous research on customer loyalty, the paper builds a two-stage pricing competition model and analyzes the competition strategies of duopoly while considering the influences of loyal customers. Since the formation of customer loyalty is built on the base of customer’s Long-term repeat purchase, so the two-stage model constructed in this paper can reflect the detailed process of the generation of customer loyalty.Based on the consideration of uniform and non-uniform distributed customers, two models are built. The paper focuses on the transfer conditions of customers in the second term and the changes in competition strategies of enterprises. In the first stage, the prices are determined by duopoly at the same time. In the second term, based on observed the result of pricing decision and market share of the first stage, the duopoly make the pricing decision respectively in the second stage and analysis the conditions of customer transfer and whether the equilibrium exists.It is a two-stage dynamic model. After getting the equilibrium in the second stage, we take the equilibrium into the first stage, and analysis the Nash equilibrium of first stage and how the long-term profit of two enterprises changes with the pricing of first stage. The study shows that the pricing strategy in the second term is related to the market structure in the first stage. In the second stage, those enterprises with loyal customers tend to raise the prices. From the aspects of enterprises’long-term benefits and competition advantages, loyal customers can bring much profits. In order to gain more loyal customers, the duplopy would carry out a fierce competition in the first term on the pricing strategy. The enterprise with high-quality services has advantages in the markets, where customers are sensitive to products quality. While in the less sensitive markets, sharp competitions in pricing strategies exist.