Pricing Competition And Coordination For Dual-channel Supply Chain Based On Service Cooperation

With the rapid development of the e-commerce market, more and moreenterprises introduced direct channel on the basis of the traditional retail channels togain more market share and greater economic profits. However, establishing the directchannel will face many constrained conditions. On the one hand, empirical studiesreveal that the service quality on the direct channel has an impact on the consumers’online shopping. As retailers can give the service to the customers directly, theirservice cost can be lower than the manufacturers. The manufacturer’s direct channelservice is at a disadvantage, so how to do cooperate with retailers at the servicecooperation has become the focus problem for manufacturers. On the other hand,establishing the direct channel will pose a threat to retailer’s retail channel, so it cancause the channel conflict. Therefore, how to formulate reasonable price andcoordinate the interests of the channel members, has become an urgent problem.To begin with, this article considers the condition that the manufacturers transferthe direct channel’ services to the retailers. The structure mode of dual channel servicecooperation is built. Based on game theory, manufacturer leader in the Stackelberggame, the Bertrand game and the centralized decision-making mode pricing model areestablished. Then the optimal pricing can be obtained. Through analyzing theinfluencing of the service level, service cost and wholesale prices to channel prices anddemand, we can find that manufacturers and retailers will increase direct price andretail price in order to make up for a lot of service costs. Manufacturers should beproperly reduce the service cost of direct channel and should seek cooperate with theretailers whose service cost is low. Manufacturers will choose a Stackelberg gameenvironment to compete with the retailers. The changing trends of the prices, profit andwholesale prices under different levels of service is simulate by Matlab software. Theconclusion of the pricing strategy is verified, and we find that the total profits of dualchannel under the decentralized decision-making mode is less than the total profits ofdual channel under the centralized decision making mode.Moreover, this paper introduced the quantity discounts coordination mechanismand Two-Part Tariff mechanism. In manufacturer leading Stackelberg game andBertrand game environment, the dual channel profits can be coordinated and optimized.Through setting different coordinating parameters in the coordination model, the manufacturer and retailer’s profits can be increased.