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Uniform Pricing Strategy vs. Price Differentiation Strategy in the Presence of Cost Saving and Demand Increasing

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Abstract

Price differentiation or discrimination strategy has been regarded as the best choice for firms with online and offline channels, however, recent years often witnessed the practices of the uniform pricing strategy. This paper aims to address the question whether the uniform pricing strategy may be better for the manufacturer, when the uniform pricing strategy has a positive impact on increasing the customer demand and reducing the operations cost. The research shows that the uniform pricing strategy can be better than the price differentiation strategy when the cost saving and demand increasing are large enough or the consumers’ acceptance of online channel lies in a certain interval. Moreover, the manufacturers or brand owners need a tradeoff between the benefit from online channel and the negative impact from the offline channel when they implement the price differentiation strategy. Finally, the authors obtain some managerial insights and implications based on the numerical analyses, which are in line with the phenomena in practice.

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Authors and Affiliations

  1. School of Economics and Management, University of Chinese Academy of Sciences, Beijing, 100010, China

    Qiang Cai, Chunlin Luo, Xin Tian & Shouyang Wang

  2. Key Laboratory of Big Data Mining and Knowledge Management, Chinese Academy Sciences, Beijing, 100190, China

    Qiang Cai & Xin Tian

  3. School of Information Technology, Jiangxi University of Finance and Economics, Nanchang, 330013, China

    Chunlin Luo

  4. Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing, 100190, China

    Shouyang Wang

Authors
  1. Qiang Cai
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  2. Chunlin Luo
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  3. Xin Tian
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  4. Shouyang Wang
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Corresponding author

Correspondence to Xin Tian.

Additional information

The research was partially supported by the National Natural Science Foundation of China under Grant Nos. 71390331, 71461009, 71761015, 71202114, and Science and Technology Project of Jiangxi Provincial Education Department under Grant No. GJJ160436.

This paper was recommended for publication by Editor ZHANG Xun.

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Cai, Q., Luo, C., Tian, X. et al. Uniform Pricing Strategy vs. Price Differentiation Strategy in the Presence of Cost Saving and Demand Increasing. J Syst Sci Complex 32, 932–946 (2019). https://doi.org/10.1007/s11424-019-7082-y

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  • DOI: https://doi.org/10.1007/s11424-019-7082-y

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