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.