Pricing Strategy of App Promotion of App Store Under Different Market Structure

Zhang Xiuyi; Zhang Xinxin; Hou Wenhua

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Pricing Strategy of App Promotion of App Store Under Different Market Structure

Zhang Xiuyi, Zhang Xinxin, Hou Wenhua

Published in Asia-Pacific Journal of Management Science and Engineering (Volume 1, Issue 2)

Received: 18 December 2019 Accepted: 3 March 2020 Published: 16 March 2020

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Abstract

Currently, the revenue of most App Stores consists of user-value based revenue and App-promotion based revenue. App promotion can bring the platform promotion fee and increase the user-value based revenue because more users will consume the App. Considering these two different sources of income, we develop a App store as the platform which promotes two same Apps. We discuss the App market structure under different parameters, the promotion pricing strategy of App Stores, and the promotion strategy of Apps. The study shows that the market structure depends on the utility of Apps and the cost of platform promotion. When the market is completely covered, the promotion price only depends on the promotion cost, and the Apps under competition will fall into the “prisoner's dilemma”. When the market is not covered, the promotion price is in negative correlation to the user-value for platform and in positive correlation to the user-value for Apps; compared to the covered market, promotion price of the uncovered market is low, or even lower than the cost in order to encourage Apps to promote. The platform is willing to sacrifice promotion revenue in exchange for more user value revenue.

Published in	Asia-Pacific Journal of Management Science and Engineering (Volume 1, Issue 2)
Page(s)	5-13
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

App Store, Profit Model, Pricing Strategy, App Promotion

References

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APA Style

Zhang Xiuyi, Zhang Xinxin, Hou Wenhua. (2020). Pricing Strategy of App Promotion of App Store Under Different Market Structure. Asia-Pacific Journal of Management Science and Engineering, 1(2), 5-13.

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ACS Style

Zhang Xiuyi; Zhang Xinxin; Hou Wenhua. Pricing Strategy of App Promotion of App Store Under Different Market Structure. Asia-Pac. J. Manag. Sci. Eng. 2020, 1(2), 5-13.

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AMA Style

Zhang Xiuyi, Zhang Xinxin, Hou Wenhua. Pricing Strategy of App Promotion of App Store Under Different Market Structure. Asia-Pac J Manag Sci Eng. 2020;1(2):5-13.

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@article{10045670,
  author = {Zhang Xiuyi and Zhang Xinxin and Hou Wenhua},
  title = {Pricing Strategy of App Promotion of App Store Under Different Market Structure},
  journal = {Asia-Pacific Journal of Management Science and Engineering},
  volume = {1},
  number = {2},
  pages = {5-13},
  url = {https://www.sciencepublishinggroup.com/article/10045670},
  abstract = {Currently, the revenue of most App Stores consists of user-value based revenue and App-promotion based revenue. App promotion can bring the platform promotion fee and increase the user-value based revenue because more users will consume the App. Considering these two different sources of income, we develop a App store as the platform which promotes two same Apps. We discuss the App market structure under different parameters, the promotion pricing strategy of App Stores, and the promotion strategy of Apps. The study shows that the market structure depends on the utility of Apps and the cost of platform promotion. When the market is completely covered, the promotion price only depends on the promotion cost, and the Apps under competition will fall into the “prisoner's dilemma”. When the market is not covered, the promotion price is in negative correlation to the user-value for platform and in positive correlation to the user-value for Apps; compared to the covered market, promotion price of the uncovered market is low, or even lower than the cost in order to encourage Apps to promote. The platform is willing to sacrifice promotion revenue in exchange for more user value revenue.},
 year = {2020}
}

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TY  - JOUR
T1  - Pricing Strategy of App Promotion of App Store Under Different Market Structure
AU  - Zhang Xiuyi
AU  - Zhang Xinxin
AU  - Hou Wenhua
Y1  - 2020/03/16
PY  - 2020
T2  - Asia-Pacific Journal of Management Science and Engineering
JF  - Asia-Pacific Journal of Management Science and Engineering
JO  - Asia-Pacific Journal of Management Science and Engineering
SP  - 5
EP  - 13
PB  - Science Publishing Group
UR  - http://www.sciencepg.com/article/10045670
AB  - Currently, the revenue of most App Stores consists of user-value based revenue and App-promotion based revenue. App promotion can bring the platform promotion fee and increase the user-value based revenue because more users will consume the App. Considering these two different sources of income, we develop a App store as the platform which promotes two same Apps. We discuss the App market structure under different parameters, the promotion pricing strategy of App Stores, and the promotion strategy of Apps. The study shows that the market structure depends on the utility of Apps and the cost of platform promotion. When the market is completely covered, the promotion price only depends on the promotion cost, and the Apps under competition will fall into the “prisoner's dilemma”. When the market is not covered, the promotion price is in negative correlation to the user-value for platform and in positive correlation to the user-value for Apps; compared to the covered market, promotion price of the uncovered market is low, or even lower than the cost in order to encourage Apps to promote. The platform is willing to sacrifice promotion revenue in exchange for more user value revenue.
VL  - 1
IS  - 2
ER  -

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Author Information

Zhang Xiuyi

Business School, Nankai University, Tianjin, China
Zhang Xinxin

School of Management, Tianjin University of Technology, Tianjin, China
Hou Wenhua

Business School, Nankai University, Tianjin, China

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Plain Text BibTeX RIS

APA Style

Zhang Xiuyi, Zhang Xinxin, Hou Wenhua. (2020). Pricing Strategy of App Promotion of App Store Under Different Market Structure. Asia-Pacific Journal of Management Science and Engineering, 1(2), 5-13.

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ACS Style

Zhang Xiuyi; Zhang Xinxin; Hou Wenhua. Pricing Strategy of App Promotion of App Store Under Different Market Structure. Asia-Pac. J. Manag. Sci. Eng. 2020, 1(2), 5-13.

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AMA Style

Zhang Xiuyi, Zhang Xinxin, Hou Wenhua. Pricing Strategy of App Promotion of App Store Under Different Market Structure. Asia-Pac J Manag Sci Eng. 2020;1(2):5-13.

Copy | Download

@article{10045670,
  author = {Zhang Xiuyi and Zhang Xinxin and Hou Wenhua},
  title = {Pricing Strategy of App Promotion of App Store Under Different Market Structure},
  journal = {Asia-Pacific Journal of Management Science and Engineering},
  volume = {1},
  number = {2},
  pages = {5-13},
  url = {https://www.sciencepublishinggroup.com/article/10045670},
  abstract = {Currently, the revenue of most App Stores consists of user-value based revenue and App-promotion based revenue. App promotion can bring the platform promotion fee and increase the user-value based revenue because more users will consume the App. Considering these two different sources of income, we develop a App store as the platform which promotes two same Apps. We discuss the App market structure under different parameters, the promotion pricing strategy of App Stores, and the promotion strategy of Apps. The study shows that the market structure depends on the utility of Apps and the cost of platform promotion. When the market is completely covered, the promotion price only depends on the promotion cost, and the Apps under competition will fall into the “prisoner's dilemma”. When the market is not covered, the promotion price is in negative correlation to the user-value for platform and in positive correlation to the user-value for Apps; compared to the covered market, promotion price of the uncovered market is low, or even lower than the cost in order to encourage Apps to promote. The platform is willing to sacrifice promotion revenue in exchange for more user value revenue.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Pricing Strategy of App Promotion of App Store Under Different Market Structure
AU  - Zhang Xiuyi
AU  - Zhang Xinxin
AU  - Hou Wenhua
Y1  - 2020/03/16
PY  - 2020
T2  - Asia-Pacific Journal of Management Science and Engineering
JF  - Asia-Pacific Journal of Management Science and Engineering
JO  - Asia-Pacific Journal of Management Science and Engineering
SP  - 5
EP  - 13
PB  - Science Publishing Group
UR  - http://www.sciencepg.com/article/10045670
AB  - Currently, the revenue of most App Stores consists of user-value based revenue and App-promotion based revenue. App promotion can bring the platform promotion fee and increase the user-value based revenue because more users will consume the App. Considering these two different sources of income, we develop a App store as the platform which promotes two same Apps. We discuss the App market structure under different parameters, the promotion pricing strategy of App Stores, and the promotion strategy of Apps. The study shows that the market structure depends on the utility of Apps and the cost of platform promotion. When the market is completely covered, the promotion price only depends on the promotion cost, and the Apps under competition will fall into the “prisoner's dilemma”. When the market is not covered, the promotion price is in negative correlation to the user-value for platform and in positive correlation to the user-value for Apps; compared to the covered market, promotion price of the uncovered market is low, or even lower than the cost in order to encourage Apps to promote. The platform is willing to sacrifice promotion revenue in exchange for more user value revenue.
VL  - 1
IS  - 2
ER  -

Copy | Download