A pricing model for group buying based on network effects.
Group buying (GB) is a popular business model in e-commerce. With the rise of online social media, the positive network effect of buying with others is more important than price discount for consumers to choose GB. However, the negative network effect of GB is also significant for some consumers. In...
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| Format: | Article |
| Language: | English |
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Public Library of Science (PLoS)
2019-01-01
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| Series: | PLoS ONE |
| Online Access: | http://europepmc.org/articles/PMC6345429?pdf=render |
| _version_ | 1818430049487945728 |
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| author | Guanqun Ni |
| author_facet | Guanqun Ni |
| author_sort | Guanqun Ni |
| collection | DOAJ |
| description | Group buying (GB) is a popular business model in e-commerce. With the rise of online social media, the positive network effect of buying with others is more important than price discount for consumers to choose GB. However, the negative network effect of GB is also significant for some consumers. In this paper, we classify consumers into two segments considering both positive and negative network effects, and three possible sales strategies as well as their optimal decisions on price are presented. We find that GB strategy dominates individual buying (IB) strategy when the positive network effect is sufficiently high or the proportion of consumers with low valuation is relatively large. We also find that MIX strategy offering both IB and GB is always better than IB, while the relationship between MIX and GB is depending on actual market situations. Some other managerial insights are also discussed. |
| first_indexed | 2024-12-14T15:27:14Z |
| format | Article |
| id | doaj.art-e4dcdbadab254114980123c8513b5a43 |
| institution | Directory Open Access Journal |
| issn | 1932-6203 |
| language | English |
| last_indexed | 2024-12-14T15:27:14Z |
| publishDate | 2019-01-01 |
| publisher | Public Library of Science (PLoS) |
| record_format | Article |
| series | PLoS ONE |
| spelling | doaj.art-e4dcdbadab254114980123c8513b5a432022-12-21T22:56:00ZengPublic Library of Science (PLoS)PLoS ONE1932-62032019-01-01141e021110910.1371/journal.pone.0211109A pricing model for group buying based on network effects.Guanqun NiGroup buying (GB) is a popular business model in e-commerce. With the rise of online social media, the positive network effect of buying with others is more important than price discount for consumers to choose GB. However, the negative network effect of GB is also significant for some consumers. In this paper, we classify consumers into two segments considering both positive and negative network effects, and three possible sales strategies as well as their optimal decisions on price are presented. We find that GB strategy dominates individual buying (IB) strategy when the positive network effect is sufficiently high or the proportion of consumers with low valuation is relatively large. We also find that MIX strategy offering both IB and GB is always better than IB, while the relationship between MIX and GB is depending on actual market situations. Some other managerial insights are also discussed.http://europepmc.org/articles/PMC6345429?pdf=render |
| spellingShingle | Guanqun Ni A pricing model for group buying based on network effects. PLoS ONE |
| title | A pricing model for group buying based on network effects. |
| title_full | A pricing model for group buying based on network effects. |
| title_fullStr | A pricing model for group buying based on network effects. |
| title_full_unstemmed | A pricing model for group buying based on network effects. |
| title_short | A pricing model for group buying based on network effects. |
| title_sort | pricing model for group buying based on network effects |
| url | http://europepmc.org/articles/PMC6345429?pdf=render |
| work_keys_str_mv | AT guanqunni apricingmodelforgroupbuyingbasedonnetworkeffects AT guanqunni pricingmodelforgroupbuyingbasedonnetworkeffects |