Pricing strategy of innovative product in supply chain considering anticipated regret

Abstract

Product innovation is a significant marketing strategy for enterprises to attract customers. However, innovative products may not meet consumers’ expectations, where consumers would regret and return after purchasing the products. Firstly, a Stackelberg game is constructed in this paper model under different supply chain power structures. And then, the impact of consumers’ anticipated regret and innovation attributes are discussed on the equilibrium results and supply chain profit through theoretical comparison and numerical simulation. The results show that: (1) Sales enterprise can adopt the strategy of pricing penetration to promote the demand and avoid selling risk. (2) Enterprise can provide customers with high value-added services to increase profit. (3) Manufacturing enterprise can adopt the additive value strategy to promote consumption and gain extra profit. The conclusion can provide reference opinions for enterprises’ innovation and pricing decision-making. However, the different regret coefficients for innovative products and current products are not considered in this paper. Further the situation is considered in which consumers purchase current product, discount product and innovative product.