Optimal Channel Strategies For Competitive Manufacturers

The fast development and abroad application of information technology have brought a lot of opportunities and risk to companies since twenty-first century. Not only does manufacturer can sell products through traditional retailing channel, but also bring products to consumers by online-channel directly. Thus, channel selection problems of manufacturers have made the first place of supply chain channel management research; Also, competition is the unchangeable theme of market economy. Styles of competition could change with highly modernize and technologize of market, and the competition of market has become the supply chain competition from company competition. The research emphasis of paper is optimal channel structure strategies of manufacturers in competitive environment.Firstly, we analyze channel selection problem of manufacturer in single supply chain environment which manufacturer considers whether open online-channel on the basis of retailing channel. We analyze the manufacturer equilibrium wholesale price, quantity, and profit under two different environments which the selling price of direct channel is the same or not with retailing channels. The conclusion reveals that manufacturer could select direct channel when direct channel fixed cost is low.Secondly, we analyze the manufacturer channel selection problem using dynamic-game model when market is competitive, which each manufacturer could select direct channel (D) or traditionally retailing channel(R). We discuss the effect of manufacturer bargaining power, the cross-price elasticity, and fixed cost of direct channel to manufacturer channel selection. The conclusion complies that manufacturer could use retailing channel (or direct channel) when the bargaining powers of manufacturer are high (low). When bargaining power of one manufacturer is high and the other is low, or both at relative medium level, hybrid channel structure is the Nash Equilibrium.Thirdly, we consider the problem of whether manufacturer could add a direct channel on basis of retailing channel under competitive environment. We discuss effect of retailer quantity loss, the cross-price elasticity, the demand share of retailing channel and fixed cost of direct channel to manufacturer channel selection. The conclusion reveals that manufacturers could select single retailing channel when retailer quantity losses are high; When quantity loss of one retailer is high and the other is low, or both at relative medium level, hybrid channel structure is the Nash Equilibrium.