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Pricing decision with conspicuous customers: quick responses versus value-added services
Tianjin Univ, Peoples R China.
Tianjin Univ, Peoples R China.
Tianjin Univ, Peoples R China.
Linköping University, Department of Management and Engineering, Production Economics. Linköping University, Faculty of Science & Engineering.ORCID iD: 0000-0003-3058-7431
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2020 (English)In: International Journal of Production Research, ISSN 0020-7543, E-ISSN 1366-588XArticle in journal (Refereed) Epub ahead of print
Abstract [en]

In order to eliminate the negative effects of customer strategic behaviour, retailers often adopt quick response or value-added services. While in a luxury market with conspicuous customers, retailers pricing decisions of these two strategies become more complicated. This paper studies a supply chain with a retailer serving a mixture of conspicuous and ordinary strategic customers. We develop three models so that the retailer provides (i) neither quick response nor value-added services; (ii) only quick response; (iii) only value-added services. Subsequently, we analyse the impacts of conspicuous customers on quick response and value-added services by pricing and strategy comparisons. The model further extends to the situation including both strategies. The results show that, firstly, when the proportion is less than a threshold, the retailer should adopt a low price strategy, and vice versa. Besides, the quick response could induce the retailer to adopt high price while value-added services inhibit it. Secondly, the customer conspicuous behaviour can motivate retailers to provide quick response and inhibit their value-added services. Finally, by observing the retailers decisions when they can adopt two strategies simultaneously, we find that the existence of quick response can amplify the benefits of value-added services.

Place, publisher, year, edition, pages
TAYLOR & FRANCIS LTD , 2020.
Keywords [en]
pricing policy; behavioural operations management; retail supply chain; conspicuous customers
National Category
Transport Systems and Logistics
Identifiers
URN: urn:nbn:se:liu:diva-164261DOI: 10.1080/00207543.2020.1724341ISI: 000514278200001OAI: oai:DiVA.org:liu-164261DiVA, id: diva2:1414289
Note

Funding Agencies|National Natural Science Foundation of ChinaNational Natural Science Foundation of China [71672121]; Independent Innovation Foundation of Tianjin University [2019XSC-0001]

Available from: 2020-03-12 Created: 2020-03-12 Last updated: 2020-03-12

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • oxford
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf