Study On Channel Distribution Strategy Of Vertically Differentiated Products

Thanks to the development of e-commerce and logistics technology,the channel structure is divided into Brick-and-Mortar,Click-and-Click and Brick-and-Click.To mitigate channel conflict of the dual-channel,strategy of product differentiation is one of the best policies,which is to sell products of different quality in different channels.At this point,the manufacturer faces a new problem—how to distribute different products to different channels.Previous studies have mainly assumed that the quality of the product is endogenous,focusing on how to determine the quality of products under a given'channel structure.Few people consider the problem that how should two vertically differentiated products should be matched to different channels when the product quality is exogenous under a given channel structure.Therefore,the thesis will focus on the channel distribution strategy for vertically differentiated products.Firstly,we consider three distribution strategies for two vertically differentiated products in a single channel.A Manufacturer-lead Stackelberg game model is built to obtain the equilibrium decision of each supply chain member.It shows that in the direct selling of electronic channels,if the quality of products differs greatly,the best strategy for manufaeturers is to sell vertically differentiated products.In traditional distribution channels,the optimal strategy of manufacturers is always to sell vertically differentiated products.Secondly,an e-channel has been added to the traditional channel to investigate the channel distribution strategy of vertically differentiated product under the two dual channel structures of RD and RR.The research found that when the product quality difference coefficient is small and the unit transportation cost is large,the manufacturer will sell low-quality product in traditional channels and sell high-quality product in electronic channels.Conversely,manufacturers will choose to sell high quality products in traditional channels and low quality products in electronic channels.From another perspective,if a high-quality product is distributed to traditional channels and a low-quality product is distributed in electronic channels,when the competitive advantage beyond quality exceeds a certain threshold,the manufacturer will simultaneously sell two heterogeneous products;conversely,manufacturers only sell low quality products.If a high-quality product is distributed to electronic channels and a high-quality product is distributed in electronic channels,manufacturers will simultaneously sell vertically differentiated products when the competitive advantage over quality is small.The thesis further points out that the profit of the manufacturer is an increasing function of the consumer's acceptance of the e-channel and the evaluation of the value of the product.Hereafter,some suggestions are provided to the manufacturer.