Bundle Pricing of Product Line and Value-Added Services Considering Reference Price Effect

Wei Qi, Nan Li, Xuwang Liu, Xiwang Guo, Jiacun Wang, Ying Tang

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Price is an important index of consumers' purchase choice, and the price comparison behavior of consumers in the decision-making process also affects the profit and loss of their own purchase utility to varying degrees. Based on multinomial logit(MNL) model, the reference price is incorporated into product line development and design, and the pricing decision of product line and value-added services bundle is studied. The influence mechanism of reference price effect on optimal product pricing and maximum profit is analyzed, and the deviation of strategic decision-making caused by not considering reference price effect is discussed. The results show that the reference price effect has a positive impact on the lowest price products in the product line, but has a negative impact on the high price products in the product line, the total market share of the firm and the total profit. When the reference price effect is ignored, the pricing of different quality products and services in the product line will be higher or lower, and the total market share and total profit will be higher. The results can provide theoretical support for product line design and pricing decision.

Original languageEnglish (US)
Title of host publication2023 IEEE International Conference on Systems, Man, and Cybernetics
Subtitle of host publicationImproving the Quality of Life, SMC 2023 - Proceedings
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages2608-2613
Number of pages6
ISBN (Electronic)9798350337020
DOIs
StatePublished - 2023
Event2023 IEEE International Conference on Systems, Man, and Cybernetics, SMC 2023 - Hybrid, Honolulu, United States
Duration: Oct 1 2023Oct 4 2023

Publication series

NameConference Proceedings - IEEE International Conference on Systems, Man and Cybernetics
ISSN (Print)1062-922X

Conference

Conference2023 IEEE International Conference on Systems, Man, and Cybernetics, SMC 2023
Country/TerritoryUnited States
CityHybrid, Honolulu
Period10/1/2310/4/23

All Science Journal Classification (ASJC) codes

  • Electrical and Electronic Engineering
  • Control and Systems Engineering
  • Human-Computer Interaction

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