Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of Mouth
Word of mouth (WOM) is crucial in customers’ purchasing decisions and affects companies’ long-term profits. This study examines the long-term trends in companies’ dynamic pricing and profits by using the Hamiltonian function method and dynamic simulation to construct a dynamic equation. It takes int...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2024-08-01
|
| Series: | Journal of Theoretical and Applied Electronic Commerce Research |
| Subjects: | |
| Online Access: | https://www.mdpi.com/0718-1876/19/3/105 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1850260598319742976 |
|---|---|
| author | Feiyan Han Yunchao Guo Haofei Yu Bo Li |
| author_facet | Feiyan Han Yunchao Guo Haofei Yu Bo Li |
| author_sort | Feiyan Han |
| collection | DOAJ |
| description | Word of mouth (WOM) is crucial in customers’ purchasing decisions and affects companies’ long-term profits. This study examines the long-term trends in companies’ dynamic pricing and profits by using the Hamiltonian function method and dynamic simulation to construct a dynamic equation. It takes into account the intensity of word of mouth faced by companies and analyzes the level of publicity and consumers’ predictions of product quality. In this paper, we also discuss the interactive processes between WOM and advertising levels, the two most prominent market factors, and their ultimate impact on companies. The experimental results show that elevated levels of external advertising can potentially prompt companies to establish higher product pricing strategies, particularly in scenarios where the intensity of word of mouth is pronounced. In the initial phases of market development, the saturation level of consumers within the market exerts a negligible influence on companies’ long-term profit margins. Conversely, the rate of natural attrition from consumers’ upper threshold of product quality expectations distinctly impacts companies’ profitability. |
| format | Article |
| id | doaj-art-0a7b2fa3dcf641679bfb5dc5f5b3783c |
| institution | OA Journals |
| issn | 0718-1876 |
| language | English |
| publishDate | 2024-08-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Journal of Theoretical and Applied Electronic Commerce Research |
| spelling | doaj-art-0a7b2fa3dcf641679bfb5dc5f5b3783c2025-08-20T01:55:35ZengMDPI AGJournal of Theoretical and Applied Electronic Commerce Research0718-18762024-08-011932157217910.3390/jtaer19030105Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of MouthFeiyan Han0Yunchao Guo1Haofei Yu2Bo Li3Economics and Management Department, Xinzhou Teachers University, Xinzhou 034000, ChinaCollege of Management and Economic, Tianjin University, Tianjin 300072, ChinaCollege of Management and Economic, Tianjin University, Tianjin 300072, ChinaCollege of Management and Economic, Tianjin University, Tianjin 300072, ChinaWord of mouth (WOM) is crucial in customers’ purchasing decisions and affects companies’ long-term profits. This study examines the long-term trends in companies’ dynamic pricing and profits by using the Hamiltonian function method and dynamic simulation to construct a dynamic equation. It takes into account the intensity of word of mouth faced by companies and analyzes the level of publicity and consumers’ predictions of product quality. In this paper, we also discuss the interactive processes between WOM and advertising levels, the two most prominent market factors, and their ultimate impact on companies. The experimental results show that elevated levels of external advertising can potentially prompt companies to establish higher product pricing strategies, particularly in scenarios where the intensity of word of mouth is pronounced. In the initial phases of market development, the saturation level of consumers within the market exerts a negligible influence on companies’ long-term profit margins. Conversely, the rate of natural attrition from consumers’ upper threshold of product quality expectations distinctly impacts companies’ profitability.https://www.mdpi.com/0718-1876/19/3/105word of mouthdynamic decision makingcorporate profitpricing |
| spellingShingle | Feiyan Han Yunchao Guo Haofei Yu Bo Li Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of Mouth Journal of Theoretical and Applied Electronic Commerce Research word of mouth dynamic decision making corporate profit pricing |
| title | Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of Mouth |
| title_full | Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of Mouth |
| title_fullStr | Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of Mouth |
| title_full_unstemmed | Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of Mouth |
| title_short | Research on Dynamic Pricing and Long-Term Profit of Companies under Influence of Word of Mouth |
| title_sort | research on dynamic pricing and long term profit of companies under influence of word of mouth |
| topic | word of mouth dynamic decision making corporate profit pricing |
| url | https://www.mdpi.com/0718-1876/19/3/105 |
| work_keys_str_mv | AT feiyanhan researchondynamicpricingandlongtermprofitofcompaniesunderinfluenceofwordofmouth AT yunchaoguo researchondynamicpricingandlongtermprofitofcompaniesunderinfluenceofwordofmouth AT haofeiyu researchondynamicpricingandlongtermprofitofcompaniesunderinfluenceofwordofmouth AT boli researchondynamicpricingandlongtermprofitofcompaniesunderinfluenceofwordofmouth |