Optimal pricing decisions for multichannel healthcare service with differing consemers’ knowledge levels

Abstract

Purpose

The purpose of this paper is to establish a stylized model to solve the pricing strategy, resource allocation and consumer surplus problems of multichannel healthcare services.

Design/methodology/approach

This paper considers a two-stage decision model with different levels of consumers’ knowledge. Faced with physical problems, knowledgeable consumers can solve their problems by seeking online healthcare channels, while unknowledgeable consumers need to make a two-stage decision to try to solve their problems.

Findings

The effective diagnosis rate and the proportion of knowledgeable consumers positively impact the optimal pricing in online and offline channels. In addition, a higher proportion of knowledgeable consumers does not result in higher demand in the online and offline channels. Moreover, if service providers lower their prices a small amount, they will lose some profit, but the consumer surplus will be higher, which will encourage more consumers to access healthcare services.

Research limitations/implications

Knowledge levels are simplified into two categories. Also, the authors assume the resources of online and offline healthcare services are comparable.

Originality/value

This paper incorporates the knowledge level and misdiagnosis rate into the model framework to study the most effective pricing strategy for multichannel healthcare services.

Citation

Yang, F., Wang, W. and Zheng, X. (2022), "Optimal pricing decisions for multichannel healthcare service with differing consemers’ knowledge levels", Journal of Modelling in Management, Vol. 17 No. 4, pp. 1351-1371. https://doi.org/10.1108/JM2-02-2021-0034