Mixed Channel Selection And Pricing Behavior And Equitable Factors Hitchhiking Based

Consumers’free-riding behavior based on the difference of channel service is inevitable under dual-channel; meanwhile vertical competition and horizontal competition coexistence will also increase the complexity of decision-making and cause channel inequity in dual-channel. Based on consumer’s free-riding behavior, this paper investigate manufacturer’s channel selection and pricing under different dual-channal sturcures, and deeply analyze how free-riding behavior, consumer characteristics, product characteristics, channel service, channel fairness and so on influence the decision-making results. The main findings are as follows:(1)By considering three situations, such as single traditional channel, single online channel and centralized dual-channel controlled by manufacturer, we first discuss the consumer shopping utility function and channel demands. Furthermore, we get the equilibrium solutions of these situations. Under this dual-channel structure, the impact of free-riding behavior on dual-channel pricing is systematically studied. And we find that the improvement of traditional channel service enhances not only the profit of traditional channel, but also increases the income of the online channel, which ultimate achieve the channel win-win situation. When the phenomenon that online channel takes free-riding of the traditional channel’s service happens, the traditional price is significantly higher than that of online; on the contrary, online price is higher than traditional price. In short, it is more favorable for manufacturers to adopt dual-channel marketing model than the single-channel model.(2) We consider another two partial integrated channel structures: manufacturer only controls the online channel or the traditional channels. Under these two channel structures, we respectively build Stackelberg pricing game between the manufacturer and traditional retailer, or between the manufacturer and e-retailer. Then comparatively analyze the affects of consumer free-riding behavior, channel characteristics, product characteristics and consumer types under the different channel structures. We give some managerial implications for manufacturer’s channel selection and pricing. If consumer’s free-riding capacity based on traditional channel service is weak, the dual-channel structure that manufacturer controls the online channel while traditional retailer takes charge of the traditional channel is a better channel selection with a lower level of market prices; when traditional market is critical to the quality of service and consumer’s free-riding behavior is obvious, manufacturers choose to set up traditional physical store, and strengthen the quality of service will be more profitable. From another perspective, when the manufacturer’s product type is targeted at young consumers with low-end or high-end brand product, the channel structure that manufacturer controls online channel, traditional retailer controls the traditional channel is suggested; if the manufacturer focuses on the service-sensitive middle-aged consumers, or the young consumers with middle-end brand product, the dual-channel structure that manufacturer take charge of traditional channel and online retailer own online channel should be chosen.(3) Fairness is introduced when manufacturer controls the online channel. It is found that manufacturer’s equilibrium price that based on fair factors is lower than the equilibrium price that ignoring channel fair. And considering channel fairness factor, manufacturer will lose some revenue in order to achieve fair channel, but retailer income increases. On one hand, when the retailer facing disadvantageous inequality, considering the fairness slightly improves the retailer’s earnings, oppositely reduced the revenue of manufacturer and supply chain. In this case, manufacturer would like to ignore the channel fair. On the other hand, if the retailer facing advantageous inequality, the concern of fairness enhances both the performance of retailer and supply chain, at the same time, the increase of retailer’s profit is bigger than the decrease of manufacturer’s profit significantly. This time, as long as manufacturer can design appropriate coordination mechanisms based on fairness, then the supply chain will be able to achieve the Pareto improvement.