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A re-examination of experience service offering and regular service pricing under profit maximization
Zhaotong Lian1; Xinhua Gu1; Jinbiao Wu2
2016-11-01
Source PublicationEuropean Journal of Operational Research
ISSN0377-2217
Volume254Issue:3Pages:907-915
Abstract

A firm may offer an experience service free of charge to attract more customers to buy its regular service. This paper provides an economic analysis for interactions between the capacity-constrained firm and its waiting-averse customers, generating certain managerial insights. Free services should be sped up to move customers onto the paid service if it is idle, or slowed down to hold onto customers and avoid exacerbating congestion in the paid service if it is busy. A lower price should be charged for the regular service as compensation to customers for service delay if more of them buy that service. When more customers arrive for experience services, a greater price reduction should be offered to attract them into the regular service if it becomes more congested.

KeywordCustomer Experience Economic Intuitions Managerial Insights Pricing Queueing
DOIhttp://doi.org/10.1016/j.ejor.2016.05.023
URLView the original
Indexed BySSCI
Language英语
WOS Research AreaBusiness & Economics ; Operations Research & Management Science
WOS SubjectManagement ; Operations Research & Management Science
WOS IDWOS:000378663000017
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Citation statistics
Cited Times [WOS]:1   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionDEPARTMENT OF ACCOUNTING AND INFORMATION MANAGEMENT
Faculty of Business Administration
DEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
Corresponding AuthorJinbiao Wu
Affiliation1.Faculty of Business Administration, University of Macau, Macau SAR, China
2.School of Mathematics and Statistics, Central South University, Changsha 410075, Human, China
First Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Zhaotong Lian,Xinhua Gu,Jinbiao Wu. A re-examination of experience service offering and regular service pricing under profit maximization[J]. European Journal of Operational Research,2016,254(3):907-915.
APA Zhaotong Lian,Xinhua Gu,&Jinbiao Wu.(2016).A re-examination of experience service offering and regular service pricing under profit maximization.European Journal of Operational Research,254(3),907-915.
MLA Zhaotong Lian,et al."A re-examination of experience service offering and regular service pricing under profit maximization".European Journal of Operational Research 254.3(2016):907-915.
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