Dynamic Analysis of Retailers’ Paid Membership Strategy

Lina Xu,Zhiqing Meng,Daqing Gong

doi:10.1155/2021/6412614

Abstract

Paid membership system has attracted more and more attention from retailers because of its advantages in improving customer loyalty, increasing repeat purchases and corporate cash flow in the short term, and collecting consumption data conveniently. In the fierce competition environment, it is an interesting topic whether the paid membership card can be accepted by the customers as soon as possible. Based on the theory of evolutionary game, this paper discusses the strategies of retailers to implement the paid membership in the case of two different consumer groups. The results show that only when the relationship between the parameters meets certain conditions can the paid membership card be accepted smoothly. In order to satisfy the condition, retailers should take such measures: making the difference between service level and membership card price bigger and reducing consumers’ estimated default risk and retailers’ service adjustment factor. The results of this study provide a useful reference for retailers to successfully implement the paid membership system.

Highlights

With the development of information and logistics technology, consumers can search and obtain goods more conveniently
In November 2016, BILI announced a conversion in China from paid membership to points-based membership, officially declaring the failure of its paid membership system. e key to success or failure is whether the membership system costing a lot of money can be accepted by consumers. e questions that should be answered by retailers include the following: Should the paid membership system be introduced? How to price the membership? What level of service should be provided?
If only customer H pays for the membership card, in order to increase the retention rate of this group because of its high consumption ability and significant contribution to the enterprise performance, the retailer will provide high-level member service Sh (1 + k)S

Summary

Introduction

With the development of information and logistics technology, consumers can search and obtain goods more conveniently. There is a publicly announced service level S, for the retailer there is a lot of room to manoeuvre membership services (such as controlling the percentage of products participating in promotional activities and providing exclusive benefits for members from time to time) because of the lag and long-term membership service It is hard for any single consumer to accurately predict the service level of membership card. If only customer H pays for the membership card, in order to increase the retention rate of this group because of its high consumption ability and significant contribution to the enterprise performance, the retailer will provide high-level member service Sh (1 + k)S. The evolution process of decision-making behavior of the two consumer types after the retailer introduces the membership card system, as well as the final evolutionary stability strategy, will be analyzed.

Consumer L

Instability point Saddle point Saddle point ESS