Optimal strategies for product price, customer environmental volunteering, and corporate environmental responsibility

A green marketing strategy must emphasise at least three aspects: environmentally friendly products that satisfy customer needs, consumers' perceptions of a firm's commitment to products and the environment, and competitive product prices (Menon and Menon, 1997). First, we propose a dynamic programming model to develop the aforementioned strategy for a trade-off among product price, customer environmental volunteering (CEV), and corporate environmental responsibility (CER). Second, we solve the Hamilton-Jacobi-Bellman (HJB) equations to obtain optimal strategies in scenarios with and without government subsidies. Third, we implement a case study on The Walt Disney Company to verify these optimal strategies. Last, we conduct parameter sensitivity analyses using numerical simulations to draw some practical implications. The results suggest that: (i) government subsidies can effectively enhance a firm's CER and CEV investments, corporate reputations, product prices, and profits, which will encourage the firm to contribute more to its environmental initiatives; (ii) regardless of the height of the initial corporate reputation level, a firm should not engage in myopic thinking and ignore continuous corporate reputation management, which will damage its reputation and profits; and (iii) corporate reputation management should be a firm's long-term strategy with continuous investments.