Strategic Pricing with Consumer Behavior Factor


Student thesis: Doctoral Thesis

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Award date28 Aug 2017


This dissertation explores pricing strategies by taking the consumer behavior and market disruption into consideration in the fashion industry. Fashion supply chain’ notable characteristics make this industry as one suitable avenue for efficient supply chain management practices. Specifically, price decisions in fashion industry usually occur in a competitive market, such as two traditional offline retailers, one online retailer and one offline retailer. In addition, the market of fashion industry is likely to be disrupted. Furthermore, with the development of Internet, consumers can conveniently catch the product information. Thereby they incline to be more strategic and ingenious when purchasing, which implies consumers are more concerned with behavioral factors that may influence their wiliness to pay and excepted utility of products. Note that although pricing problem has been well-studied in both empirical and analytical model literature, little study focuses on how to make pricing decisions by considering the specific consumer conditions, market conditions in fashion supply chain. This dissertation utilizes theoretical models to study two important behavioral factors that can affect pricing decisions, i.e., strategic choice and waiting behavior, and reference price in Chapter 3 and Chapter 4. The study in Chapter 3 focuses on the competitive pricing between a fast fashion seller and a luxury seller with the effects of consumers’ strategic choice and waiting behavior that means consumers can strategically determine which seller and which period to buy. The study in Chapter 4 focuses on the competitive pricing between an online retailer and an offline retailer in the supply chain. Suppose that consumers have a different preference among these two channels and they usually make a comparison between the retail prices of the online and offline channels, thereby forming a reference price in mind. Except for consumers’ behavioral factors, pricing decision are influenced by market conditions. The study in Chapter 5 investigates the pricing decision between a manufacturer and a retailer under a disrupted market with pull and push contracts. Also, the coordination problem is incorporated into the pricing problem in this setting. In general, this dissertation belongs to a growing number of studies combining the microeconomics, marketing with psychological discipline. This dissertation demonstrates that the mentioned two types of behavioral factors as well as the market disruption really have a profound influence on pricing problems and it obtains some analytical solutions which can present certain suggestions for enterprises in reality.