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374. Dynamic Pricing, Objective and Subjective Quality, and the Price-Quality Relationship
Invited abstract in session MD-33: Optimal control in organizations, stream Optimal Control Theory and Applications.
Monday, 14:30-16:00Room: 42 (building: 303A)
Authors (first author is the speaker)
| 1. | Régis Chenavaz
|
| KEDGE Business School | |
| 2. | Domenico De Giovanni
|
| Unical | |
| 3. | Pietro De Giovanni
|
| Bocconi |
Abstract
Dynamic pricing and quality are important strategic variables for firms.
However, the effects of consumers' objective and subjective quality evaluations on dynamic pricing must be better understood. This article develops an optimal control model of a firm's dynamic pricing and objective quality investment decisions over time. Our research contributes to the literature on the price-quality relationship by providing a dynamic pricing rule and identifying the conditions below which more significant objective and subjective quality may lead to an increase or decrease in the price.
Subjective quality impacts dynamic price but not objective quality. In addition, a negative price-quality relationship is possible with both objective and subjective quality. Consequently, the distinction between objective and subjective qualities yields more profitable marketing mix strategies.
Keywords
- Marketing
- Quality Management
- Control Theory
Status: accepted
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