Research on Pricing Decision-Making for Fresh Agricultural Products with Strategic Customers and Value Decreasing Rate

Abstract

With the strategic customers and decreasing value taken into consideration, the study establishes the model to express how the retailer makes pricing decision when facing the strategic and myopic customers at the same time. In order to describe the effect of the value decreasing rate of products and the proportion of strategic customers, we assume the product value decreases in certain rate, than we investigate the decision-making process in two-stage sequence. The results show different effects between the excess supply and insufficient supply status in the market. Retailers’ optimal price will increase with the value decreasing rate, and will be unrelated with the proportion of strategic customers in former status, while retailers’ optimal price will increase with the value decreasing rate and the proportion of strategic customers in latter status. The computational studies show the conclusion and provide the reasonable advices for agricultural product retailers.