The effects of online product reviews on manufacturer´s pricing policy

Author

Gong, Yi ; Qian, Yu ; Yuan, Hua

Author_Institution

Sch. of Manage. & Econ., Univ. of Electron. Sci. & Technol. of China, Chengdu, China

fYear

2012

fDate

2-4 July 2012

Firstpage

557

Lastpage

561

Abstract

With the rapid development of e-commerce, online product reviews play an important role in B2C environment. Online product reviews can affect the potential consumers´ purchasing decision (demand for a product), which may in turn affect manufacturers´ pricing strategies. However, it is still not clearly known how the information contained in online reviews affects a manufacturer´s pricing policy. To fill this gap, this paper considers a two-stage pricing problem in which a monopoly manufacturer makes prices for a product. We calculate the optimal pricing equilibrium of the monopoly manufacturer in two stages, and the result shows that manufacturer should adjust his pricing policy according to the actual evaluation of the product quality from the online consumers´ reviews.

Keywords

electronic commerce; manufacturing systems; pricing; purchasing; B2C environment; consumers purchasing decision; e-commerce development; manufacturers pricing policy; manufacturers pricing strategies; monopoly manufacturer; online consumers reviews; online product review effect; optimal pricing equilibrium; Bayesian methods; Consumer electronics; Educational institutions; Marketing and sales; Monopoly; Pricing; Bayesian updating; Online reviews; Pricing policy;

fLanguage

English

Publisher

ieee

Conference_Titel

Service Systems and Service Management (ICSSSM), 2012 9th International Conference on

Conference_Location

Shanghai

Print_ISBN

978-1-4577-2024-6

Type

conf

DOI

10.1109/ICSSSM.2012.6252299

Filename

6252299