Dual-Channel Strategies With Price And Service Considering Consumer Free Riding Behavior

In recent years,E-commerce has developed rapidly in China,and some manufacturers have begun to expand network channels to sell products based on traditional retail channels.Expanding the network channel brings new opportunities to the traditional supply chain,such as enriching consumers' way to buy goods,finding potential customers and improving profits of supp ly chain participants.But after manufacturers extended network channels,they will face horizontal direct competition with retailers which means that traditional supply chains will face new challenges,such as price competition and conflict between channe ls.In addition,when the double channels exist at the same time,some consumers began to experience products in the traditional retail channel and buy in the network channel which may have a positive or negative effect on participants.Therefore,this paper is based on the dual channel supply chain that the manufacturer expand the network channel,we will build a decision model between participants based on whether consumers have free riding behavior.Then using game theory to solve the optimal equilibrium,and analysing the effect of product's network applicability and consumer sensitivity to service on product price,service level,channel demand,and enterprise profit.Finally we will discuss the impact of the free riding behavior of consumers on the price decision,service level and profit.There are two aspects as follows:(1)Considering the manufacturer bulid the network channel itself,we research on dual-channel strategies with price and service based on consumer free riding behavior.The study found that,when the product is more suitable for saling on the network channel,the manufacturer can make a high price with low price advantage,but it will weaken the traditional retailers to provide a high quality service.When the product's network applicability is higher,manufacturer's income is higher,which is good for the manufacturer.When without consumer free riding behavior,the traditional retailer can make differentiated products through providing certain services when the consumers value service,which is propitious to it make a higher price and provide a high quality services.As a result the traditional retailer can get a higher profits.When with consumer free riding behavior,the price competition between channels get more intensified;traditional retailer's service can not form the product differentiation and weaken the channel competition.So the traditional retailer provide low services and obtain lower profits.At the time,manufacturer's profits do not necessarily increase.(2)Considering the manufacturer entrust a third network platform to bulid the network channel,we research on dual-channel strategies with price and service based on consumer free riding behavior.We find that some conclusions are the same as the manufacturer bulid the network channel itself: when the product is more suitable for saling on the network channel,the manufacturer can make a high price with the advantage of low price,but it will weaken the traditional retailers to provide a high quality service.When the product's network applicability is higher,manufacturer's income is higher,which is good for the manufacturer.When without consumer free riding behavior,the traditional retailer can make differentiated products through providing certain services when the consumers value service,which is propitious to it make a higher price and provide a high quality services.As a result the traditional retailer can get a higher profits.When with consumer free riding behavior,the price competition between channels get more intensified;traditional retailer's service can not form the product differentiation and weaken the channel competition.So the traditional retailer provide low services and obtain lower profits.At the time,manufacturer's profits do not necessarily increase.In addition,we can come to another conclusions: whether consumers have free riding behavior,the manufacturer entrust a third network platform saling goods online which can effectively alleviate channel price competition,enhance the traditional retailer to provide a higher quality service,and the traditional retailer can get higher income.Only when the consumers have free riding behavior,the manufacturer gain more revenue than itself building the network channel.