Bundling Pricing Strategy Based On Consumer Regret

When facing a decision,consumers might anticipate regret and thus incorporate in their choice their desire to eliminate or reduce this risk.We study the impact of consumer's anticipated regret on a firm's mixed bundling strategy in an advancing selling context when consumers have uncertain valuations.A consumer may experience action regret from accepting the discount of advance selling or bundling,otherwise,she might suffer inaction regret if she chooses to reject the discount.Combined with Regret Theory,we construct the consumer's utility function which includes the anticipated disutility and the economic utility,then,calculate the market demand for any product and establish the pricing model.Based on the above,this paper adopts numerical analysis to explore the influence of consumer's anticipated regret on retailer's optimal prices and profit.Studies show that consumer's anticipated regret have a significant influence on the optimal pricing strategy.Retailer can reduce the profit's loss for this behavior by considering consumer's anticipated regret in the pricing model.In the numerical analysis,retail will suffer up to 29.55%profit's loss if they without consider the impact of anticipated regret.This paper also investigates that anticipated regret behavior impact on pricing strategies when the marginal cost of individual product changes.Studies illustrate that the influence of consumer's anticipated regret in pricing strategy is consistent with the basic analysis.Lu addition,retailers should bundle product of marginal cost is closer if consumer have a weaker regret,otherwise,retailer need to bundle product of marginal cost is further which can alleviate the regret influence on profit's loss.Facing consumers with weaker inaction regret,they should bundle the products with close marginal cost,on the contrary,they should sell the bundled products with large marginal cost difference.Furthermore,this paper analyzes the influence of consumer's anticipated regret on pricing under different marginal profits of products.This research shows that retailers should sell low-profit products in this strategy,otherwise,they will suffer more profit's loss.Finally,this paper investigates the impact of consumer's anticipated regret and the correlation between the bundles(e.g.complementary and substitute)on retailer's pricing strategy.Studies show that this strategy can help retailers make more profit facing with remorseful consumers when bundled with complementary products.If the consumers have a stronger action regret,that is,the consumers are extremely unwilling to accept the discount(e.g.advance selling discount and bundling discount)offered by the retailer.At this moment,retailer should not bundle the products with a high degree of complementarity.Facing remorseful consumers,retailers should reduce discounts in order to cater to the needs of consumer when the bundles have substitution features.Otherwise,retailer should increase the discount of the most of products,so as to guide consumers to buy discount products,when faced with inaction regretful consumers.With the increase of the complementary coefficient of bundles,retailers should reduce the discounts when facing non-regretful consumers,and increase the advance selling discount of the bundles and reduce the discount of other products in advance selling stage when facing regretful consumers,so as to mitigate the influence of substitute bundles on consumer's purchase decision.