Internal Pricing Strategies And External Pricing Competition Analysis Of A Dual-channel Retailer

The rapid rise of Internet technology and the growing development of e-commerce has greatly changed people’s lives. At the same time, it allows some companies to open up new growth model. In this paper, under the real background that Suning take the strategy that all product categories’ s price in more than 1,700 retail stores nationwide and online store are unified. We discuss one dual-channel retailer’s internal pricing strategy and the pricing competition relationship between the dual-channel retailer and one independent Internet retailer.First of all, this paper analyzed the situation of only one dual-channel retailer by building a linear demand model and compared the dual-channel retailer’s same price and different price between online and offline. The study found that: When the potential market size of the traditional channel is greater than the Internet channel, if adopting the same price strategy increase the traditional channel’s potential market size and reduce the potential size of the Internet channel, the dual-channel retailer’s profit is higher when adopting the different price. If adopting the same price strategy increase the Internet channel’s potential market size, when the increment reaches a certain level, the dual-channel retailer’s profit is higher when adopting the same price. Similarly, When the potential market size of the traditional channel is less than the Internet channel, if adopting the same price strategy increase the traditional channel’s potential market size and reduce the potential size of the Internet channel, the dual-channel retailer’s profit is higher when adopting the different price. If adopting the same price strategy increase the Internet channel’s potential market size, when the increment reaches a certain level, the dual-channel retailer’s profit is higher when adopting the same price.Secondly, we studied the price competition between one dual-channel retailer and one independent Internet retailer under the situation that the dual-channel retailer adopts the same price in the two channels. The study found that: When dual-channel retailer does not occupy the monopoly advantage of the overall market size, intense price competition phenomenon between the dual-channel retailer and independent Internet retailer occurs easily. When the overall size of the market dominated, there is a certain gap between the two retailers from the beginning, so, price competition phenomenon doesn’t occur easily.Finally, this paper also analyzed the two retailers’ market position’s influence on the pricing strategy. The analysis found that: When the dual-channel retailer’s traditional channel market size is relatively small, it has no price advantage. But with the expansion of the traditional channel market size, dual-channel retailer begins to gain market advantage, and then, competition with the independent Internet retailer is becoming increasingly fierce. Within a certain range, though the price is lower than the independent Internet retailer, the profit is higher. With the expansion of the traditional channel market size, the advantages of dual-channel retailer are increasingly prominent, competition is slowing, until the occupation of the market is absolutely dominant.