Strategic Customer Behavior and Pricing Strategy Based on the Horizontal Differentiation of Products

Abstract

Manufacturers produce products with horizontal differences to meet different needs of customers. This paper compares the influence of three different sales channels on strategic customers’ choice and the pricing strategy of products with horizontal differentiation. The results show that the strategic customers whose willingness to pay (WTP) is close to 1 will buy high-performance products and whose WTP is close to 0 will not purchase any kind of products in the two dual-channel models. If the manufacturers adopt dual channel to sell products with horizontal differences, the retailers agree that the manufacturers sell high-performance products in the traditional channel and sell low-performance products in the electronic channel. In dual-channel supply chain model I, the higher the satisfaction of high-performance products and the lower the satisfaction of low-performance products, the more conducive to the retailers.