NDLI: Manufacturer's direct selling and pricing strategy

Content Provider	IEEE Xplore Digital Library
Author	Shuo Huang Qing Ye
Copyright Year	2010
Description	Author affiliation: School of Economics and Management, Tsinghua University, Beijing, China (Shuo Huang; Qing Ye)
Abstract	Development of e-business and logistics stimulates manufacturers to sell their products directly to customers online besides traditional channels through independent retailers. This paper studies the manufacturer's direct selling decision under an entry game framework which conceptualizes price competition between the manufacturer and its independent retailers. The direct channel helps the manufacturer to absorb consumer segment otherwise would not purchase from the retail channel. Equilibrium results show that the direct channel is more profitable for the manufacturer when the manufacturer's profit margin is relatively high compared to consumers' transaction cost of purchasing, direct channel's inefficiency is not significant, and the cost of direct channel investment is low. Our results also argue that equal-pricing policy suggested by many previous studies might be effective to avoid channel conflict in certain situations, but the effect depends on the condition of market profitability and consumer's transaction cost. Moreover, the direct channel might not necessarily be detrimental to the retailers because they can benefit from direct channel's inefficiency and free riding the manufacturer's channel investment. In total, direct selling can be socially efficient.
Starting Page	1
Ending Page	14
File Size	157706
Page Count	14
File Format	PDF
ISBN	9781424464852
e-ISBN	9781424464876
DOI	10.1109/ICSSSM.2010.5530243
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2010-06-28
Publisher Place	Japan
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Costs Profitability Supply chains Pulp manufacturing Channel Competition Entry game Investments Direct Selling Pricing Marketing and sales Internet Virtual manufacturing Pricing Strategy Logistics
Content Type	Text
Resource Type	Article

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