关键词: 显著性理论, 网络外部性, 时间限免策略, 功能限免策略

Abstract: With the development of information technology and the advancement of society, there is a steady increase in the production and sales of software products, on which consumers become more dependent. A large user base indicates a great potential in the paid market. In order to attract more paying users, software firms have introduced free trial strategies to promote product diffusion, of which time-and feature-limited free trials are most widely used. The time-limited free trial means that the full-featured version of a product is provided free of charge during a limited probation period, and consumers will decide whether to buy it after the trial. The feature-limited free trial refers to the fact that the firm provides users with two versions simultaneously. One is the permanently free version with only basic functions and services as well as inferior quality, and the other is the paid value-added version with full functions and services as well as superior quality. Software products are featured by network externality, which means a greater number of users will cause greater effects, and consumers will take the number of users into account when purchasing a software product. Therefore, both free trial strategies can promote product diffusion and reduce users’ uncertainty about product quality through network externalities. However, in reality, different consumers have different preferences for product attributes and different sensitivity to changes in quality and price. Therefore, although the free trial strategies can make the quality-sensitive consumers more willing to pay, there is a problem that the price-sensitive consumers may not pay for the paid version since their demands have already been satisfied by the free version. Such an intrinsic preference behavior of consumers and the impact of network externalities bring challenges to the strategic choice and price decision of software firms.
In this paper, the influence of consumers’ preferences and network externalities on the software company’s choice of the free trial strategy for a software product is explored. In studies of depicting individuals’ preference behavior, the salience theory holds that consumers assign greater weights to the attributes they prefer before making purchase decisions. Thus, this theory can well depict the individual preference behavior. In this paper, two attributes of software product price and quality are selected, and consumers are divided into price-sensitive types (giving higher weight to price) and quality-sensitive types (giving higher weight to quality). Salience theory is used to describe the different levels of sensitivity of different types of consumers to price and quality attributes of software products. Then, by using the model method and considering the influence of both consumers’ personal internal preferences and network externalities, the utility functions of consumers under no-free, time-limited free and feature-limited free trial strategies are constructed to obtain the demand and profit functions of software companies. Finally, the optimal profit from the 3 different strategies is given. After comparison analysis, the optimal free trial strategy under different market conditions is proposed for the company. The results of this study show that: (1)As the strength of network externalities increases, the optimal free trial strategies are time-limited, no-free and feature-limited successively if consumers’ unit cognitive increment in product quality after the time-limited free trial is greater than the perceived quality before trial. If consumers’ unit cognitive increment is smaller than the perceived quality, the optimal free trial strategies are time-limited and feature-limited successively. (2)When the software firm adopts the time-limited free or no-free trial strategy, greater sensitivity to quality results in higher pricing and greater profits. This result still holds true when the feature-limited free trial is implemented, if the strength of network externalities does not exceed a certain threshold or it surpasses the level that makes the profit from the price-sensitive market positive. If the strength of network externalities exceeds the threshold, but the profit from the price-sensitive market is positive, greater sensitivity to price leads to higher pricing and higher profits. (3)No matter what strategy the company adopts, it can improve the optimal profit by increasing consumers’ dependence on network externalities.
This paper comprehensively considers the influence of both by consumers’ intrinsic preferences and network externalities on their selection of software products, uses the salience theory to describe consumers’ intrinsic preferences for product quality and price, and constructs utility models that combine salience with network externalities to get game equilibrium results in different types of markets. Furthermore, this paper also analyzes how software firms should measure pros and cons. The study results provide reference for software firms to make marketing strategies, such as whether to implement free trail strategies and what kind of free trail strategy to implement. However, there are still some limitations in this paper. Future studies can take into account the effect of disutility caused by disappointment of consumers to the time-limited free trial. In addition, this paper only discusses the game relationship between software firms and consumers, but ignores the competition among alternative products manufactured by different software firms in the market.

Key words: salience theory, network externalities, time-limited free strategy, function-limited free strategy