Pricing Policies And Services Cooperation Under A Dual-Channel Supply Chain

There is a prevalent phenomenon that a same product is distributed in traditional retail channel and electronic channel, simultaneously, under a dual-channel supply chain. That is to say, consumers can choose one of the channels to purchase the goods they need, according to characteristics of the products and their habits. With the increasing development of the dual channels, the characteristics of the channels are becoming more and more obvious. The two channels will provide consumers different types of services according to the characteristics of its distribution, with the process of sales. However, experience service provided by the traditional retail channel has an irreplaceable advantage compared with the others, because experience can improve satisfaction of consumers for any product. For electronic channels, without products experience directly makes the channel have a high rate of return and makes consumer experience product by traditional channel, then buy the product from electronic channel, which is called service free riding behavior. But the service free riding behavior makes traditional retail channel negatively provide experience service. In this case, how to develop the experience service strategies of the manufacturer and retailer becomes a problem which should be studied. What’s more, the different ways of sales product of dual-channel make the different products have different compatibility with channels. The products are more compatible with the electronic channel, such as electronic products and books. And others maybe more compatible with the traditional retail channel, such as instant noodles, Coca-Cola etc. In this case, studying pricing policies under dual-channel supply chain is very meaningful. In the paper, we develop theoretical research based on above background as follows.Firstly, the paper improves the existing linear demand functions and raises the demand functions which the degree of price sensitivity is asymmetric between dual channels. Then, using the Stackelberg game theory, where manufacturer is the leader of the game and retailer is the follower of the game, the paper analyzes pricing policies of the manufacturer and retailer. The study finds that the manufacturer can set the sales price of electronic channel flexibly with the change of the asymmetry degree of price sensitivity between dual channels. When the advantage of electronic channel is significant (or disadvantage is not significant), the price of electronic channel is high. If not, the price is low. Next, an example simulation is used to analyze the change trend of the manufacturer and the retailer’s profit with the impacts of asymmetry degree of price sensitivity between dual channels and basic market share of channel. And we find that, the profit of manufacture is mainly influenced by the former, but the profit of retailer is mainly influenced by the latter. Finally, the paper puts forward wholesale price contract to coordinate the dual-channel supply chain. And the study finds that the contract can not only make the profits of the manufacturer and the retailer Pareto improvement, but also improve the imbalance situation of profit of manufacturer and retailer.Secondly, based on service dilemma under dual-channel supply chain, the paper puts forward a theory model of service cooperation of the manufacturer and the retailer through sharing service cost. We expect the model can reduce conflict of channels, and make the manufacturer and retailer achieve a win-win. The study finds that the service cooperation between manufacturer and retailer always make the manufacturer beneficial, but the retailer’s profit will increase only when they provide service for the product which is more compatible with traditional retail channel.