Work

Dynamic Pricing in B2C Based on Online Product Reviews

Year: 2011

Type: conference-paper

Abstract: To study how e-tailors should fix the price to influence word-of-mouth to maximize profits, this paper comes up with a dynamic pricing model based on online product reviews. Customers base consumption decisions on the principle of utility maximization. A lower price can lead to more positive reviews and improve the utility, but it may reduce the profit. The model gives the optimal pricing strategy for the e-tailor in a duopoly market competing with an offline retailor. The analytical results show with the increase of online reviews, the optimal pricing of the e-tailor increases and the growth rate declines.

Source: Procedia Engineering

DOI: 10.1016/j.proeng.2011.11.2501

Authors: Hongwei Wang, Wei Zhang, Lijuan Zheng

Institution: Tongji University

Language: English

Topic: Supply Chain and Inventory Management

Subfield: Management Information Systems

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: diamond

Funders: National Natural Science Foundation of China, Shanghai Leading Academic Discipline Project

Award: G2193799348