Two-Stage Pricing Strategy for Supply Chain Considering Consumer Fairness Concerns

Product launches typically consist of two stages: an introductory stage and a maturity stage, with the latter characterized by higher market demand. This prompts retailers to increase prices during the maturity stage in order to maximize profits. However, exceeding the fair price threshold for consumers can trigger a sense of unfairness, leading to purchase aversion and a decrease in mature demand. At this time, if retailers consider consumer fairness concerns in advance and adopt the price decrease strategy, consumers will take the first-stage price as a reference point, which will instead have a psychologically positive effect and increase demand. In order to assess the impact of these two strategies on supply chain profits, we have developed models for price increase and decrease strategies that take into consideration consumer fairness concerns. Subsequently, we compare the variations in profit among manufacturers, retailers, and the supply chain in centralized and decentralized scenarios. The research findings suggest that in centralized decision-making, retailer faces a threshold in choosing between implementing the price increase or decrease strategy. Conversely, in decentralized decision-making, retailer consistently adopts the price increase strategy. Furthermore, in centralized decision-making, consumer fairness concerns lead to reduced overall profit for the supply chain. However, it is paradoxical that under certain parameter constraints of decentralized decision-making, such consumers’ presence can enhance the supply chain’s overall profit.