Agricultural Products’ Bundled Pricing Based on Consumers’ Organic Preferences

Xijia Liu (), Xiaoshu Liu, Anna Shi and Chenwei Li
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Xijia Liu: Business School, Hohai University, Nanjing 210098, China
Xiaoshu Liu: College of Information Management, Nanjing Agricultural University, Nanjing 210031, China
Anna Shi: Business School, Hohai University, Nanjing 210098, China
Chenwei Li: International Business School Suzhou, Xi’an Jiaotong-Liverpool University, Suzhou 215123, China

Sustainability, 2023, vol. 15, issue 17, 1-14

Abstract: To improve the market competitiveness of agricultural e-retailers, we offer an interactive bundle pricing strategy (IBPS). Compared to existing fixed bundling strategies, IBPS takes into account the variability of customer needs and provides consumers with more and more flexible choice opportunities. As more and more consumers tend to buy more environmentally friendly and healthy organic produce, a hybrid bundle pricing model for organic and inorganic produce is developed with the goal of maximizing retailers’ profit and optimizing consumers’ surplus, taking into account consumers’ organic preferences. Meanwhile, we introduce a free shipping strategy to further stimulate consumption. Then, we propose a heuristic algorithm to solve it and derive the optimal price for various bundled packages. Through numerical analysis, we draw some conclusions and propose corresponding management insights: (1) Compared with traditional online retailing methods, IBPS can effectively stimulate consumption and increase retailers’ profits; (2) as the free shipping threshold increases, total profits show a trend of first increasing and then decreasing, indicating that an appropriate free shipping threshold can optimize retailers’ profits; (3) as consumers’ green preferences increase, the sales of organic products increase while the total profit rises, so it is suggested that retailers increase consumer green preference through appropriate advertising; (4) the higher the consumption level, the higher the total value of consumers’ word purchases, so retailers can appropriately increase the free shipping threshold at high consumption levels.

Keywords: agricultural products; bundle pricing; consumer organic preference (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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