Dynamic Operational Strategies Incorporating Consumer Reference Price Effects and Enterprise Behavior: A Differential Game Approach

Journal Title: Acadlore Transactions on Applied Mathematics and Statistics - Year 2023, Vol 1, Issue 1

Abstract

The continuous evolution of consumer behavior in the modern era of consumption has prompted enterprises to explore the underlying behavioral factors of consumers and cater to their particular needs. Moreover, developing a rational operational behavior model and responding effectively to the dynamic market environment have become critical concerns for businesses. This study examines the impact of consumer reference price effects and enterprise short-sighted behavior on strategic selection and performance, employing differential game theory to construct a game model between manufacturers and retailers. Utilizing Behrman's continuous dynamic programming theory, analytical solutions for various models are derived, followed by comparative analyses and numerical examples. The research reveals that: (1) manufacturers' behavior patterns are found to be dominant, favoring far-sighted behavior, which not only enhances profits but also enables consumers to access higher quality and cost-effective products; retailers should opt for collaboration with far-sighted manufacturers and exhibit a preference for short-sighted behavior. (2) In terms of overall system profit, the FM model emerges as the optimal combination. (3) When the reference price effect has a small impact on market demand, enterprises can make use of the reference price effect to actively promote marketing and gain profit; as the influence increases, intensifying the degree of influence effectively augments profits.

Authors and Affiliations

Fangfang Guo, Zhuang Wu, Yuanyuan Wang, Jiaqi Du, Wanshu Fu

Keywords

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  • EP ID EP732896
  • DOI 10.56578/atams010103
  • Views 70
  • Downloads 0

How To Cite

Fangfang Guo, Zhuang Wu, Yuanyuan Wang, Jiaqi Du, Wanshu Fu (2023). Dynamic Operational Strategies Incorporating Consumer Reference Price Effects and Enterprise Behavior: A Differential Game Approach. Acadlore Transactions on Applied Mathematics and Statistics, 1(1), -. https://europub.co.uk/articles/-A-732896