Transformative value of the Internet of Things and pricing decisions

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Article number100825
Journal / PublicationElectronic Commerce Research and Applications
Volume34
Online published6 Jan 2019
Publication statusPublished - Mar 2019

Abstract

Firms increasingly target consumers with personalized products via the Internet of Things (IoT). This study investigates a firm’s decisions on IoT capability with three types of pricing policies: low price, high price, and contingent pricing. Although, intuitively, IoT capability may substitute contingent pricing in reducing demand uncertainty, this research proposes that the firm may achieve optimal profit by using contingent pricing together with IoT. Interestingly, IoT-induced product-valuation improvement will indirectly diminish the value provided by contingent pricing. The results provide insights into how firms can strategize pricing decisions along with appropriate IoT capability.

Research Area(s)

  • Internet of Things, Pricing under uncertainty, Contingent pricing, Consumer targeting