Promotional pricing and online business model choice in the presence of retail competition

Chen, Pingping; Zhao, Ruiqing; Yan, Yingchen; Li, Xiang

doi:10.1016/j.omega.2019.07.001

Cited by 112 publications

(41 citation statements)

References 60 publications

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“…For each demand of the manufacturer's product realized through the physical showroom, the manufacturer pays the corresponding retailer unit commission

β

, which is adopted by Amazon and many other retailers when cooperating with manufacturers (Jiang et al., 2011). Besides, the commission is exogenous because it is usually associated with an industry standard (Chen et al., 2020; Wei et al., 2021, 2020).…”

Section: Modelmentioning

confidence: 99%

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Bin

Zhang

Guan

et al. 2020

Int Trans Operational Res

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More and more online manufacturers collaborate with offline retailers who provide retail services to showcase products in offline retailers’ stores and feature the stores as physical showrooms. Since offline retailers may be noncompeting or competing depending on the product they sell, we investigate two collaboration strategies. Our results show that product competition causes the decreased demand that is realized through physical showroom (negative competition effect) and the increased demand to buy online directly (positive spillover effect) for the online manufacturer. When the positive spillover effect dominates the negative competition effect, the online manufacturer prefers to partner with the competing retailer and strategically sets a high price. Interestingly, the online manufacturer's willingness to partner with the competing retailer may increase with competing product value. Besides, the online manufacturer may benefit from the increased value of the competing product and the increased commission that is paid to the retailer under product competition.

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“…For each demand of the manufacturer's product realized through the physical showroom, the manufacturer pays the corresponding retailer unit commission

β

Section: Modelmentioning

confidence: 99%

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Bin

Zhang

Guan

et al. 2020

Int Trans Operational Res

View full text Add to dashboard Cite

show abstract

“…The characteristics of the retail trade arena could have ramifications in at least two ways: demography and competition (Chen et al, 2020;Misra et al, 2019;Vroegrijk et al, 2013). Research that several factors explain the divergent results found in the retail price suggested that response to consumer prices may also vary depending on (1) Promotion Communication, (2) Product Category, (3) Brand, (4) Retail Trade Characteristics, and (5) Country.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…( limiting the number of price modifications (Anderson et al, 2015). Lastly, because of the difficulty in setting prices due to the existence of online sales models through agencies that prevent the control of final prices to manufacturers (Chen et al, 2020).…”

Section: Two Different Data Sourcesmentioning

confidence: 99%

“…Online promotion channels were widely used by businesses to stimulate sales in retail. (Chen et al, 2020). This could be explained by the less pronounced problems of price comparison by presenting fewer cognitive difficulties in memorizing and comparing products from different retailers (Hackl et al, 2014).…”

Section: Two Different Data Sourcesmentioning

confidence: 99%

“…Regarding the effects of price endings on online channels, previous research yielded similar controversial conclusion (Melis et al, 2015) with few studies having explored these pricing strategies in an e-commerce context. The lack of research in such emerging markets was surprising given the changes to our understanding of business pricing and promotional processes due to the digital revolution (Chen et al, 2020;Misra et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Demand Impact for Prices Ending With “9” and “0” in Online and Offline Consumer Goods Retail Trade Channels

Lopez-Pastor

García‐Madariaga²,

Sánchez³

et al. 2020

IRMM

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Studies on demand impact for 9-ending and rounded prices have so far offered controversial results, with hardly any research focusing on their effect on online commerce or in a multichannel sales context. Our study aims to fill this gap by analyzing the conditions that influence the strategy behind setting such type of pricing in the multichannel retail business of fast-moving consumer goods (FMCG). To test the formulated hypotheses, scanner data from FMCG retailers are used. In addition to "demand" and "price", "promotion communication", "retailer type" and "price level" are included as moderators between 9-ending, rounded prices and demand. The results aim to provide, both in the academic and business fields, systematic findings of pricing relationships between online and offline channels which contribute to a better management strategy for "9-ending" and "rounded" prices.

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Online channel introduction under contract negotiation: Reselling versus agency selling

Chen

Zhuo

2021

Manage Decis Econ

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This study investigates manufacturers' online channel introduction strategies by considering two typical retailing formats, namely, reselling and agency selling. Online spillover effect and contract negotiation are considered to make the model more consistent with practice. We find that with a strong bargaining power, the manufacturer will always be profitable when it introduces online channels, whether it is reselling or agency selling. Meanwhile, agency selling is always profitable for the manufacturer than reselling. Interestingly, we find that an incentive alignment exists when two online channels are introduced, where agency selling is profitable for both the manufacturer and the e‐commerce platforms (EPs).

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Promotional pricing and online business model choice in the presence of retail competition

Cited by 112 publications

References 60 publications

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Demand Impact for Prices Ending With “9” and “0” in Online and Offline Consumer Goods Retail Trade Channels

Online channel introduction under contract negotiation: Reselling versus agency selling

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