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The effect of brand loyalty and loss aversion on competitive trade-in strategies
Total Quality Management & Business Excellence ( IF 3.6 ) Pub Date : 2021-06-03 , DOI: 10.1080/14783363.2021.1933423
Qin Zhou 1 , Kum Fai Yuen 1 , Yusen Ye 2
Affiliation  

Trade-in promotions allow consumers to turn in old products and receive a discount for purchasing a new item. Firms usually price discriminate consumers based on their purchase history (i.e. new or existing customers). However, behavioural research has shown that consumers exhibit loss aversion and brand loyalty after consuming a product that may influence economic outcomes. This paper examines the impact of consumers’ loss aversion and brand loyalty behaviour on firms’ trade-in promotion pricing strategy, profits, consumer surplus, and social welfare. Contrary to prior game theory research that generally shows that price discrimination based on purchase histories eventually results in lower profits for all firms, we find that firms’ profits from conducting price discrimination can increase with consumers’ loss aversion behaviour. We consider two scenarios where firms recognise and do not recognise consumers’ loss aversion and brand loyalty behaviour. We find that the profit with behaviour recognition is higher than that without behaviour recognition under the condition that consumers’ loss aversion concerns are sufficiently strong. However, both loss aversion and brand loyalty decrease consumer surplus. Besides, consumers’ loss aversion and brand loyalty behaviour can increase social welfare because they can reduce inefficient switching.



中文翻译:

品牌忠诚度和损失厌恶对竞争性以旧换新策略的影响

以旧换新促销活动允许消费者上交旧产品并获得购买新产品的折扣。公司通常根据消费者的购买历史(即新客户或现有客户)对他们进行价格歧视。然而,行为研究表明,消费者在消费可能影响经济结果的产品后表现出损失厌恶和品牌忠诚度。本文考察了消费者的损失厌恶和品牌忠诚度行为对企业以旧换新促销定价策略、利润、消费者剩余和社会福利的影响。与先前的博弈论研究相反,通常表明基于购买历史的价格歧视最终会导致所有公司的利润降低,我们发现公司通过价格歧视获得的利润会随着消费者的损失厌恶行为而增加。我们考虑了两种情况,公司承认和不承认消费者的损失厌恶和品牌忠诚度行为。我们发现,在消费者的损失厌恶担忧足够强的情况下,有行为识别的利润要高于没有行为识别的利润。然而,损失厌恶和品牌忠诚度都会降低消费者剩余。此外,消费者的损失厌恶和品牌忠诚行为可以增加社会福利,因为它们可以减少低效转换。损失厌恶和品牌忠诚度都会降低消费者剩余。此外,消费者的损失厌恶和品牌忠诚行为可以增加社会福利,因为它们可以减少低效转换。损失厌恶和品牌忠诚度都会降低消费者剩余。此外,消费者的损失厌恶和品牌忠诚行为可以增加社会福利,因为它们可以减少低效转换。

更新日期:2021-06-03
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