How live-streaming commerce interacts with two-period pricing when selling to strategic customers

Abstract

Live-streaming commerce serves as a novel marketing tool in the digital era, facilitating real-time interactions between streamers and customers to enhance product sales. However, the transition back to solely traditional online channels following live-stream events presents decision-making challenges for firms regarding dynamic pricing, price commitment, and price matching schemes, particularly when dealing with strategic customers. We develop a two-period theoretical model to explore the selection of pricing schemes by a firm who may launch a live-streaming sales. Our analysis reveals that while live-streaming cannot necessarily enhance profitability under price commitment scheme, it significantly boosts profits under dynamic pricing and price matching schemes due to amplified pricing flexibility. The increased customer patience in strategic waiting diminishes the benefits of live-streaming under dynamic pricing, whereas it enhances them under price matching with reimbursement mechanisms. Moreover, dynamic pricing and price matching schemes, traditionally perceived as less favorable, emerge as potentially more effective due to the real-time value enhancement effect of live-streaming commerce, which can mitigate customers’ strategic delay in purchasing decisions. The firm’s selection of an optimal pricing scheme under live-streaming commerce can also maximize consumer surplus, thereby enhancing social welfare and promoting a positive image of corporate social responsibility advocated by governmental bodies. This “win-win-win” scenario for the firm, customers, and government can be achieved through dynamic pricing or price commitment schemes. In this context, a conducive social environment can be fostered, enabling all participants to collaborate in expanding opportunities and benefiting everyone.