Green product development and pricing strategy considering consumer reference behavior

Abstract In the context of the green economy, green transition has emerged as a critical pathway for industries to achieve sustainable development. Green product development and pricing strategies serve as core components of firms’ green transition. This paper investigates how consumers’ environmental awareness and price–quality reference behavior influence consumer selection strategies, focusing on product line development and pricing decisions. Based on the multinomial logit model, this paper establishes a product line pricing model to analyze two development strategies: exclusive upgrading and development of green product and simultaneous development of traditional and green products. For each strategy, this paper derives optimal solutions for product price, market share, and firm profit. Our findings indicate that factors such as the green product perception sensitivity coefficient and product greenness exert differing influence trends on the optimal solution. Furthermore, a firm's green product development strategy depends on the market acceptance of green products and the price–quality reference behavior among customers. Additionally, accounting for uncertainties in platform environments, we address robust product line pricing problem, demonstrating that firms can achieve superior profits based on this approach.