Agricultural Products’ Bundled Pricing Based on Consumers’ Organic Preferences

Abstract

To improve the market competitiveness of agricultural e-retailers, we offer an interactive bundle pricing strategy (IBPS). Compared to existing fixed bundling strategies, IBPS takes into account the variability of customer needs and provides consumers with more and more flexible choice opportunities. As more and more consumers tend to buy more environmentally friendly and healthy organic produce, a hybrid bundle pricing model for organic and inorganic produce is developed with the goal of maximizing retailers’ profit and optimizing consumers’ surplus, taking into account consumers’ organic preferences. Meanwhile, we introduce a free shipping strategy to further stimulate consumption. Then, we propose a heuristic algorithm to solve it and derive the optimal price for various bundled packages. Through numerical analysis, we draw some conclusions and propose corresponding management insights: (1) Compared with traditional online retailing methods, IBPS can effectively stimulate consumption and increase retailers’ profits; (2) as the free shipping threshold increases, total profits show a trend of first increasing and then decreasing, indicating that an appropriate free shipping threshold can optimize retailers’ profits; (3) as consumers’ green preferences increase, the sales of organic products increase while the total profit rises, so it is suggested that retailers increase consumer green preference through appropriate advertising; (4) the higher the consumption level, the higher the total value of consumers’ word purchases, so retailers can appropriately increase the free shipping threshold at high consumption levels.