Abstract:
Considering the impact of user reviews, this study examines product customization and pricing strategies, and the influence of online reviews on these strategic decisions in online retail enterprises. The consumer market is segmented into standard and variety-seeking categories based on personalization preference levels. The market is segmented into ordinary consumers and uniqueness-seeking consumers based on their level of personalization. Considering the two-dimensional heterogeneity preferences of these two types of consumers for product quality and appearance, profit maximization models are constructed respectively to derive the equilibrium pricing strategies for standard and customized products. Results indicate that: 1) When consumers exhibit a high willingness to pay for product quality and unit mismatch cost is substantial, the enterprise should choose the customization strategy to meet personalized demand. With the improvement of actual product quality, the presence of online reviews further encourage the enterprise to implement product customization. 2) The price of customized products is not always higher than that of standard products. When consumers’ relative willingness to pay for the matching dimension and product quality is low, the price of standard products may exceed that of customized products, regardless of the actual quality. 3) Without product customization, if the product quality is low, the review information reduces the price and profit of products. With product customization, the decision to disclose online reviews depends on the relative quality perception of consumers. When this perception is high, regardless of actual quality, the review information reduces the price and profit of customized products, and the enterprise should close online reviews.