1. Pricing Strategies in a Dual-Channel Supply Chain with Local Advertising
- Author
-
Peng Zhang, Yong He, Dayi Shi, and Lindu Zhao
- Subjects
Microeconomics ,Empirical research ,Pricing strategies ,business.industry ,Supply chain ,Stackelberg competition ,Advertising ,The Internet ,Business ,Preference ,Communication channel ,Dual (category theory) - Abstract
With the rapid popularization of the Internet, nowadays manufacturers are increasingly adopting a dual-channel to sell their products, i.e., The traditional retail channel and online direct channel. Empirical studies have shown that retailer's local advertising has significant effects on demand and pricing decision. However, there is scant literature addressing the decision on the local advertising and its impacts on the manufacturer and retailer's pricing decisions. To fill this gap, we explore the optimal decisions of local advertising and pricing in a centralized and a decentralized dual-channel supply chain using the two-stage optimization technique and Stackelberg game, and analyze the impacts of local advertising and customers' preference to the direct channel on the pricing strategies. The results show that local advertising strongly influences pricing strategies and profits of channel members. Numerical analysis reveals that customers' preference to the direct channel has great effects on the local advertising and pricing decisions.
- Published
- 2015