Pricing Decisions for a Sustainable Supply Chain in the Presence of Potential Strategic Customers

Xinmin Liu, Kangkang Lin, Lei Wang and Lili Ding
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Xinmin Liu: College of Economics and Management, Shandong University of Science and Technology, Qingdao 266590, China
Kangkang Lin: College of Economics and Management, Shandong University of Science and Technology, Qingdao 266590, China
Lei Wang: School of Economics, Ocean University of China, Qingdao 266100, China
Lili Ding: School of Economics, Ocean University of China, Qingdao 266100, China

Sustainability, 2020, vol. 12, issue 4, 1-17

Abstract: In service to sustainable development, consumers have begun to prefer green products for their special environmental characteristics, and many enterprises are introducing new products to improve their competitiveness, but this tactic may not work if customers are strategic, as they might choose to defer purchasing decisions while prices are high and wait for lower prices in the future. Considering the differences in purchase behavior, we divided customers into two groups—strategic customers and myopic customers. Furthermore, we distinguished three types of strategic customers according to their different preferences to analyze the optimal pricing and greenness strategies in sustainable supply chain in strategic customer scenarios. Our results led to the following conclusions. (1) Strategic customers’ individual preferences can affect optimum equilibrium and that a higher purchase price threshold can stimulate the manufacturer to improve greenness and set a higher price, while a higher greenness purchase threshold and purchase value threshold will force manufacturer to set a lower price. (2) We observed that strategic customers can increase demand and vender profit. As the number of strategic customers increases, selling price and greenness will experience downward trends in a price threshold scenario but upward trends in greenness threshold and value threshold scenarios. (3) A firm can take measures to mitigate the effects of strategic customers by adjusting price and greenness dynamically according to price and greenness sensitivity, which can play a leading role in actively influencing strategic customer behavior.

Keywords: myopic customers; strategic customers; heterogeneous; greenness threshold; price threshold (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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