Cause-Related Product Pricing with Regular Product Reference

Abstract

Inspired by the universal application of cause marketing (CM) campaign, this paper develops a game theoretical model to investigate cause-related product pricing problem. By considering the customer’s prosociality level and reference behavior, where the overall utility of regular product as a reference point, we separately study the cause-related product pricing strategies for competitor with and without response. Analytical results show that consumers’ purchase behaviors (i.e., differential levels of prosociality and reference recognition) significantly influence the cause-related product pricing decisions. When faced with consumers who have different purchase behaviors, the cause-related product pricing strategies should be adjusted accordingly.