Research On Dynamic Price Of New Products’ Advance Selling:Based On The Consumer Strategy Behavior

Abstract:This paper addresses dynamic price of new products’advance selling which takes the consumer strategy behavior into consideration. Consider a seller who sells new products over two periods that the first period and the second period as the advance selling period and selling season period respectively. We combine modeling with numerical example to study the seller’s optimal decision under the principle of revenue maximization. Specifically, the main contents of this paper can be summarized as the following three aspects.First, it mainly analyzes the effects of consumer strategic behavior on sellers’decisions by considering a dynamic price model of presale period and retailing period. And the formation mechanism of optimal prices is also explored. It is concluded that postponing purchase of strategic consumer can’t always reduce seller total revenue. How the consumer strategic behavior influence the seller’s price decision, demand and revenue is probed by comparing the elastic model with the rigid model shows.Second, dynamic pricing problem of new products’advance selling is addressed in which consumers with reservations may cancel advance orders and consumers who have buy new product may return goods. It is explored to optimize new product price to maximize the total profit by inverse-deducing method. Assume that the relationship between demand and price is liner and penalty cost should be paid if consumers cancel the reservation or return goods. At last, conclusions with reference value for enterprises are obtained by numerical experiments. Reservation can reduce the uncertainty of the market, but that the higher of booking rate, the better is not correct. Proper time span of advance selling period and the whole period should be made to maximize its own benefits. Penalty cost for cancelling during retailing period is more sensitive to revenue and demand than during advance selling period. It is necessary to reasonably estimate the parameters for the seller.Third, it is explored to optimize new product price to maximize the total profit in two stages of presale and retail period. The delay of purchase happened in advance selling stage is taken into account in our model. It is found that presale prices are lower than retailing price arid presale revenue accounted for the proportion of total revenue is less than30%, under both the dynamic price and price commitment pricing strategy respectively. Consumers are inclined to buy new products till the uncertainty of new product is solved. The optimal prices obtained when the seller take price commitment strategy are greater than the optimal prices when the seller take price commitment strategy, so is the total revenue. In this research,21figures,18tables and84references are contained.