Dynamic Sales Price Control Model for Exclusive Exquisite Products within a Time Interval

Abstract

When information regarding the effective evaluation of the value of exquisite products is lacking, the market demand function for such products at a given time point is affected by the diffusion of historical transaction price information before the time point. This is because historical transaction prices play an active role in influencing the internal reference price (IRP) of customers, and the continuous diffusion of historical transaction price information leads to the continuous correction, adjustment, and updating of customers’ IRPs. Given the varying rates of such information diffusion, the speed at which customers adjust their IRPs also varies across individuals and contexts. By considering the exponential distribution of potential customers’ IRPs as an example to establish the dynamic demand function that considers the effect of historical transaction prices, this paper discusses the effect of different information diffusion rates on the demand function at a time point. On the basis of this demand function, a sales price control model that maximizes the discounted profitability for businesses in the patent term of an exquisite product is then constructed to provide businesses with an operation method to cultivate prices and increase profits.