Pricing Strategy Of The Supply Chain Retailers

Under the supply-side market-driven environment, the manufacturer is the leading party in the market, the pricing decision-making power rests in the hands of manufacturers, and the retailers are just the product transfer price taker. But now, more and more obvious as the market segmentation and product differentiation, people demand more and more types of goods, the market has gradually changed the demand side dominate the market in the market manufacturers and retailers of status change gradually, retailers are no longer mere acting as the price takers, but to a large extent to be able to affect the price decision by market demand. In order to study how retailers meet their own profit maximization, we will start from the retailer-led supply chain, explore the retailer’s pricing decisions. This paper uses the game theory and mathematical modeling to analyze the supply chain model which contains one retailer and one manufacturer and try to find the optimal pricing strategies of retailers.The main model of this study is a secondary supply chain contains of one manufacturer and one retailer, and the purpose is to study the retailer pricing strategies of how to develop optimal sales. Specifically, we will try to study the following three issues:(1) the manufacturer’s product manufacturing costs are completely symmetrical, when retailer entirely knows the manufacturer’s product manufacturing cost, how the retailer develops pricing decisions through cooperation with the manufacturer’s Game.(2) the manufacturer’s product manufacturing costs is completely asymmetric, when retailers totally unaware of the manufacturing cost of the manufacturer’s products, so how the retailer develops optimal pricing decisions.(3) retailers under asymmetric information part of the manufacturer’s product costs, but retailers can estimated the manufacturing cost based on historical trading data, so how the retailer develops its pricing decision through the cooperative game with the manufacturer. In this paper, I will establish the game model according to the above three cases and find the optimal solution to discuss how the retailer develops optimal pricing strategies to maximize its profits in the three cases. The article validated by empirical data, in order to prove the correctness of the model and the optimal solution. This article is still the basis of the above model sensitivity analysis, when the market environment changes, the retailers will also change their pricing decision. So we’ll study how the retailer reacts in order to cope with the environment change. Through the above analysis and discussion, we will have the following conclusions:1. in the supply chain environment, whether long-term or short-term, manufacturers and retailers tend to maximize the value of the supply chain through cooperation.2. when the information is completely asymmetric, even if the retailer is the game’s dominant party, but because the retailer does not know the manufacturer cost, so retailers should give up their dominant position of the game and to let the manufacturer dominant pricing decision-making, it would be both profits increase.3in the case of asymmetric partial information, retailers should be based on historical trading statistics and manufacturers, calculated on the basis of the closest to the estimated costs of the manufacturing cost, and dominated the game process. In order to achieve the supply chain as a whole as well as its own profit maximization. At this point, the size of both parties share profits depend on the bargaining power of the two sides.4. changes in the market environment also affect the retailer’s pricing decisions, retailers should change according to the market demand for the price-sensitive coefficient and maximum demand appropriate price adjustment policy.