Pricing Strategies with Promotion Time Limitation in Online Social Networks

Abstract

Online social networks provide a platform for customers to share their experience and make viral marketing possible. Through online social networks, sellers can apply marketing strategies to reach more potential buyers and thus gain more revenue. Previous studies on social network marketing based on the influence maximization problem focus on how to propagate information widely and neglect that price is a key factor that influences information diffusion. In this paper, we study the problem of how to design pricing strategies in order to maximize the revenue when the product usage or promotion time is limited. Different from the existing study of optimal pricing scheme over online social networks, we consider how the price may influence the diffusion. In addition, with limited promotion time, the prices assigned in the different promotion stages of the pricing sequence can be increasing. To better understand the problem, we propose a framework which incorporates the influence maximization problem and a multi-state diffusion model. In the diffusion model, users are divided into different groups by their purchasing behavior and have different influence power, which informs how pricing strategies can influence the potential buyers. We design several pricing strategies under our framework with different pricing sequence order and different promotion time. Simulations are performed to illustrate the concepts in our framework and compare different pricing strategies. With our framework, we can provide some guidelines for the seller when designing the pricing strategy.