{"title":"Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of Mouth","authors":"Feiyan Han, Yunchao Guo, Haofei Yu, Bo Li","doi":"10.3390/jtaer19030105","DOIUrl":null,"url":null,"abstract":"Word of mouth (WOM) is crucial in customers’ purchasing decisions and affects companies’ long-term profits. This study examines the long-term trends in companies’ dynamic pricing and profits by using the Hamiltonian function method and dynamic simulation to construct a dynamic equation. It takes into account the intensity of word of mouth faced by companies and analyzes the level of publicity and consumers’ predictions of product quality. In this paper, we also discuss the interactive processes between WOM and advertising levels, the two most prominent market factors, and their ultimate impact on companies. The experimental results show that elevated levels of external advertising can potentially prompt companies to establish higher product pricing strategies, particularly in scenarios where the intensity of word of mouth is pronounced. In the initial phases of market development, the saturation level of consumers within the market exerts a negligible influence on companies’ long-term profit margins. Conversely, the rate of natural attrition from consumers’ upper threshold of product quality expectations distinctly impacts companies’ profitability.","PeriodicalId":46198,"journal":{"name":"Journal of Theoretical and Applied Electronic Commerce Research","volume":"217 1","pages":""},"PeriodicalIF":5.1000,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Theoretical and Applied Electronic Commerce Research","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.3390/jtaer19030105","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
Word of mouth (WOM) is crucial in customers’ purchasing decisions and affects companies’ long-term profits. This study examines the long-term trends in companies’ dynamic pricing and profits by using the Hamiltonian function method and dynamic simulation to construct a dynamic equation. It takes into account the intensity of word of mouth faced by companies and analyzes the level of publicity and consumers’ predictions of product quality. In this paper, we also discuss the interactive processes between WOM and advertising levels, the two most prominent market factors, and their ultimate impact on companies. The experimental results show that elevated levels of external advertising can potentially prompt companies to establish higher product pricing strategies, particularly in scenarios where the intensity of word of mouth is pronounced. In the initial phases of market development, the saturation level of consumers within the market exerts a negligible influence on companies’ long-term profit margins. Conversely, the rate of natural attrition from consumers’ upper threshold of product quality expectations distinctly impacts companies’ profitability.
期刊介绍:
The Journal of Theoretical and Applied Electronic Commerce Research (JTAER) has been created to allow researchers, academicians and other professionals an agile and flexible channel of communication in which to share and debate new ideas and emerging technologies concerned with this rapidly evolving field. Business practices, social, cultural and legal concerns, personal privacy and security, communications technologies, mobile connectivity are among the important elements of electronic commerce and are becoming ever more relevant in everyday life. JTAER will assist in extending and improving the use of electronic commerce for the benefit of our society.