Research on optimal pricing decisions of the service supply chain oriented to strategic consumers

Ziyuan Zhang; Liying Yu

doi:10.3934/jimo.2022096

Article Contents

2023, Volume 19, Issue 5: 3509-3553. Doi: 10.3934/jimo.2022096

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Research on optimal pricing decisions of the service supply chain oriented to strategic consumers

Ziyuan Zhang and
Liying Yu^,

School of Management, Shanghai University, Shanghai, China

^*Corresponding author: Liying Yu
^*Corresponding author: Liying Yu

Received: July 2021

Revised: March 2022

Early access: June 2022

Published: May 2023

The second author is supported by the National Natural Science Foundation of China (NSFC) under Grants 12071280

Abstract Full Text(HTML) Figure(19) / Table(2) Related Papers Cited by

Abstract

With service elements in the supply chain becoming more and more important, relevant companies and their partners have gradually introduced the service supply chain. At the same time, the continuous improvement of consumption level has significantly improved consumers' consumption awareness, thus becoming the primary choice for consumers to consume strategically based on past purchase experience. To contribute to the service supply chain studies, this paper uses game theory to establish dynamic pricing decision models of a service supply chain by taking consumers' strategic consumption awareness into account. This paper solves the equilibrium pricing strategies of the manufacturer and the service integrator under the centralized and decentralization scenarios, and reveals the effect of consumers' capability trust strength, service cost, product value, product cost on the consumer's strategic behavior, and the equilibrium strategies of the manufacturer and service integrator. This paper finds that improving consumer's capability trust coefficient and product value can restrain consumer's strategic behavior either under the centralized scenario or decentralized scenario. However, the impact degree under the decentralized scenario is less than that under the centralized scenario. Second, increasing the product value cannot positively affect consumer's strategic behavior when the product value is higher than a particular value whether under the centralized scenario or decentralized scenario. With the increase of consumer's capability trust strength, the intensity of consumer's strategic behavior will decrease, which will cause more consumers to purchase products in the first stage, and will finally cause a significant impact on the pricing strategies of the manufacturer and the service integrator.

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Mathematics Subject Classification: Primary: 90B06, 90B50; Secondary: 90C33.

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Figure 1. Schematic diagram of the relationship between relevant entities in the service supply chain

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Figure 2. The effect of $ c_s $ on $ B $

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Figure 3. The effect of $ c_m $ on $ B $

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Figure 4. The effect of $ \epsilon $ on $ B $

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Figure 5. The effect of $ V_1 $ on $ B $

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Figure 6. The effect of $ \epsilon $ on $ Q $ under centralized scenario

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Figure 7. The effect of $ \epsilon $ on $ Q $ under decentralized scenario

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Figure 8. The effect of $ \epsilon $ on $ Q $

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Figure 9. The effect of $ \epsilon $ on $ Q $

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Figure 10. The effect of $ V_1 $ on $ Q $

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Figure 11. The effect of $ \epsilon $ on $ P $ under centralized scenario

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Figure 12. The effect of $ \epsilon $ on $ P $

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Figure 13. The effect of $ \epsilon $ on $ P $ under decentralized scenario

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Figure 14. The effect of $ \epsilon $ on $ w $ under decentralized scenario

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Figure 15. The effect of $ V_1 $ on $ P $

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Figure 16. The effect of $ V_1 $ on $ w $

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Figure 17. The effect of $ \epsilon $ on $ \pi_{SC}^{C} $ under centralized scenario

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Figure 18. The effect of $ \epsilon $ on $ \pi^{D} $ under decentralized scenario

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Figure 19. The effect of $ \epsilon $ on $ \pi_{SC} $

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Table 1. Some literature most relevant to this paper

Author	Service supply chain	Strategic consumer	Capability trust
Liu et al.[20]		$\surd$
Ma et al.[25]		$\surd$
Zhang et al.[42]	$\surd$
Cohen et al.[5]	$\surd$
Su et al.[33]		$\surd$
This paper	$\surd$	$\surd$	$\surd$

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Table 2. Major parameters and variables

Parameters	Meaning description
$ w $	Product wholesale price
$ P $	Product service system price
$ p(p_s) $	Product(Service)price
$ c_s(c_m) $	Unit service(product)cost
$ V $	Consumer valuation of the product and service
$ V_0 $	Threshold of waiting behavior for the strategic consumer
$ V_1 $	The highest value of product service system
$ \epsilon $	Capability trust coefficient
$ N $	Total number of potential consumers
$ B $	Intensity of consumer strategic behavior
$ Q $	Sales volume
$ Q_t $	Total sales volume of the two stages
$ \pi_{M}(\pi_{I})(\pi_{SC}) $	Profit of the manufacture(the service integrator)(the supply chain)

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