Abstract: The development of the Internet and information technology has made it easier for retailers to collect customer information, and it has also made consumers become more strategic and selective. First, the model that the retailer selling only a higher quality level product to the customers is built, then the two-stage pricing decision is studied, and the impacts of products' per-period discount factors on the products' retail prices, the sales quantities and the retailer's profits are also investigated. Then, the model that the retailer selling both a higher quality level product and a lower quality level product to the customers is considered, and the customers can choose both products during two sales periods. A two-stage pricing decision model is built and the impacts of products' per-period discount factors, the customers' acceptance for the lower quality level product on the retail prices, the sales quantities are investigated, respectively. Finally, the impacts of the model parameters (i.e., the customers' acceptance for the lower quality level product, etc) on the total profits during two periods under model II are studied by using numerical examples, then the optimal retail prices and the optimal sales quantities under the model I and the model II are compared. Our results can give a comprehensive analysis of the impacts of the strategic customer behavior on the two-stage pricing decisions, which provides a very important reference for the pricing decision of the retailer.

Key words: Pricing decision, Strategic customer behavior, Two-stage pricing, Differentiated products