The Pricing Strategy of the Manufacturer with Dual Channel under Multiple Competitions

Xueling Li, Maozhu Jin
2014 International Journal of u- and e- Service, Science and Technology  
In real life, the manufacturers typically conduct differential pricing for the same product in different regions. The dual-channel strategy not only generates the conflict between network sale channel and traditional channel, but also conflict the competition between traditional channels in different regions. We suppose that the traditional retail channels, manufacturers implementing the difference pricing strategy can make more profits. The literature mainly studies the impact of the network
more » ... annels on manufacturers pricing strategy, and discusses the four kinds of pricing strategy in dual channel under the background of the manufacturers. Finally, through the analyses of numerical simulation of the parameters on the different pricing strategies, the related conclusions are given. network marketing channels influence on the manufacturer's pricing strategy [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] . And many scholars research into the analysis of channel sales network influence on the manufacturer's pricing strategy in recent years,. Cattani eta. provide more comprehensive commentary on modeling literature coordination in traditional sales channels and network marketing channel [9] . Swaminathan and Tayur pointed out that in the background of ecommerce multi-channel management is an important area by comparing the traditional supply chain research [11] .McGuire and Staelin alternative products of its impact on sales channels through the comparison of the two productions of alternative products [12] . Granot and Sosic extended the above model, and study the alliance which has different retailers forms and substitute products to sell, alliance structure and retailers' profit according to the product substitutability and compatibility [13] .Choi studied the price competition between the manufacturer and the two channels and the effect of structure and profit of channel [14] .Chiang eta proved that the channel sales network can increase the manufacturer's profit and improve the manufacturer and the retailer bargaining power on the basement of manufacturers in the traditional channel [15] . Tsay and Agrawal assume that consumers demand depends on price and sales effort. Their study found that the increase of direct sales channels will not damage the traditional retailers and manufacturers can adjust the pricing to make increase the profit of manufacturers and retailers [16] . Chen eta points out the optimal dual channel strategy depends on the background of channel such as the management of network channel cost, the retailer's convenience, product features and other factors when manufacturers and retailers compete by service through traditional channels and Internet sales channels [17] .Bernstein eta puts forward three kinds of competition pattern and points out that network and retail channels coexist is stable equilibrium solution on the sale of highly substitutable products retailer at the same time [19] . Kurata eta proposed an international brand manufacturers competition between the network and traditional channels and local brands [20] . Xingzheng assumed that the manufacturer get retailers forecast information, and the retailer failed to get manufacturers direct sales channel prediction information [21] . Guo Yajun and Zhao Liqiang studied the mixed double channel strategy and channel conflict problems under the electronic commerce environment [22] . Pu Xu Jin et al. research the effect of direct sales model on the existence of strong retail channels how to direct model manufacturers have the effect of retail channels [23] . CattaniK D and Huang W eta gives similar results that getting the aiming products in the lowest prices is the most important [9, 24 -26] .So manufacturers how to determine its products pricing strategy become more and more important in the both traditional sales channels and the network channels, It is related to whether a company can survive better in the new era of Internet Environment. In this paper, we consider the situation of great differences in the domestic. On account of the situation of the differences between different regions in domestic market and the condition of manufacturers taking foreignization pricing strategy in difference regions, we first constructed the traditional manufacturer pricing model, then proposed and proved that the pricing differences can get more profit, which is pointed out in the traditional market makers manufacturers can implement the differential pricing to gain more profit through the different regions. Secondly, four kinds of pricing strategy of manufacturer are given, namely, retail prices remain unchanged, unified pricing strategy, different pricing strategy between channels, overall profit maximization. The pricing strategy is discussed and the different pricing strategies, the manufacturer profits, traditional channels and Internet channels sales prices are given respectively in this paper. We experiment the pricing strategy of the theoretical analysis and numerical analysis, and the various strategies are analyzed and corresponding conclusions are given. We suppose a trans-regional-sales manufacturers sell the same product at the same time, in order to gain more profits, the price discrimination strategy is taken to different customer, i.e. different regions use different pricing. Due to the rapid development of electronic commerce, customers can choose their own needs through the network channels and traditional channels in the same area when manufacturers introduced network channels.
doi:10.14257/ijunesst.2014.7.4.12 fatcat:5ljjm3fudjghnnlcfgzrdjykvu