A Study on the Price Decisions of the Dual-Channel Composite Decision in B2C Mode

A Study on the Price Decisions of the Dual-Channel Composite Decision in B2C Mode

Haoxiong Yang, Wen Wang
Copyright: © 2014 |Pages: 11
DOI: 10.4018/jeco.2014100105
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Abstract

This paper studies the subject of pricing decisions of online dual-channel based on hybrid decisions wherein a manufacturer introduces direct online marketing channels beyond the traditional online retail channels. The purpose is to study how to balance the interests of different online channels and maximize the overall efficiency of the channel. Having considered both online channels' satisfaction and the hidden costs of channel selection, by means of the demand function of both channels derived from a consumer utility and selection model, the author investigates the impacts of these two factors on the online dual-channel pricing decisions. This article also further analyzes the impact of changes in these two factors for manufacturers, retailers and channel' total revenue, with the purpose to provide decision-making reference for the enterprises' managers in the supply chain to develop optimal pricing strategies.
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2. The Specifications Of Model And Assumptions

As is shown in Figure 1, this paper analyses the online dual-channel market. The selling price of commodity in online direct marketing and retail channels are pm and pr. The reserving value of goods is jeco.2014100105.m01 (In other words, it is the maximum effectiveness when the price of the goods is zero, and its value has nothing to do with the purchase channels. It is a constant. The value of evaluation space evenly distributes in [0,jeco.2014100105.m02]).The other costs that consumers pay for online direct marketing and retail channels are vm and vr.

Figure 1.

The market structure of the online channel

jeco.2014100105.f01

The assumptions are as follows:

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