Research on pricing and return strategy of platform provider under full-reduction promotion

¹ Business and Tourism School, Sichuan Agricultural University, Chengdu, Sichuan 611830, P.R. China
² School of Economics and Management, Tongji University, Shanghai 200092, P.R. China

^* Corresponding author: fangzou0614@163.com; 2793316757@qq.com

Received: 16 January 2024
Accepted: 10 October 2024

Abstract

Based on the consumer speculative purchase problem in the full-reduction promotion scenario, considering the heterogeneity of strategic consumers’ valuation of the initial purchase intention commodity and the add-on item, as well as the possibility that consumers may be dissatisfied with the add-on items after receiving the goods, a single-period pricing decision model is constructed, and the optimal pricing strategies of the platform provider are obtained in the two cases of disallowing the return of the goods and providing a money-back guarantee, respectively. It is found that optimal original pricing exists for both commodities in both models making the platform provider most profitable. Furthermore, since the promotional discount rate is an exogenous variable, the optimal promotional price for the combination of the two commodities is obtained. It was also found that increasing the degree of relatedness of the two commodities and consumer satisfaction with the add-on items can effectively stifle speculative purchasing behavior. By comprehensively comparing the optimal profits of platform providers in the two cases, we find that neither model is absolutely dominant and gives the critical conditions for platform providers to choose different return strategies. Finally, the influence of relevant parameters on the optimal pricing strategy and profit of the platform provider under the two models is analyzed through numerical examples, which provides a reference for the platform provider to formulate the optimal strategy according to their own situation. Finally, the influence of relevant parameters on the optimal pricing strategy and profit of the platform provider is analyzed through specific data, which provides a reference for the platform provider to determine the optimal pricing and return strategy according to the operating conditions.