Abstract:

Social network group-buying is one of the dominant marketing models， and may benefit the firm in expanding the potential market， increasing consumer awareness and promoting sales. However， the firm may incur a high commission fee charged by the group-buying platform and demand shift from high-price in normal selling to relatively low-price in group-buying. The research questions in this article are：（1） Whether the enterprise needs to implement the group-buying strategy？ Can this strategy really bring about an increase in profits？（2） What impact do parameters such as market structure， diffusion effect， commission ratio and customer psychic cost have on the joint decision-making of price and group size？ （3） Considering the platform commission ratio always has a negative effect on the company’s profits， is there a win-win scenario for the firm and platform？ A market consists of a firm， a group-buying platform and consumers is considered， and joint decisions on pricing and group size are studied. There are two sales channels can be chosen by company， including retailing and group-buying based on platforms. In this article， customers are divided into transactional customers group and relational customers group based on their price-sensitive. First， a company will make a decision whether to carry out group-buying. Then the company retails goods to relational customers， and sells goods to transactional customers through group-buying. The goal of the company is to maximize its profits. The influence of different parameters in each case is analyzed， and both the good and bad effects of group-buying to company’s profits are discussed in social networks. In addition， the base model is extended to include a centralized-decision system and addresses the impact of cooperation between the firm and platform. Based on the analysis of company profits in different cases， it is found that： （1） Product cost is an important factor that affects company’s decision. （2） Longer time or more efforts are needed， more harm is done to profits. （3） Platform commission ratio always has a negative effect on profits. The company should establish a friendly and cooperative relationship with the group-buying platform， and be careful of choosing products. Through detailed numerical analysis， company’s decision about whether carry out group-buying in different cases and the impact of each parameter is explored. Finally， countermeasures and suggestions are put forward to group-buying strategy， improving company’ profits and cooperation between platform and company.

Key words: social network group buying, group-buying pricing, group-buying quantity, consumer type