Pricing Strategy in Dual-Channel Supply Chains with Loss-Averse Consumers

Author:

Liu Chengli1,Lee C. K. M.1,Leung K. H.2

Affiliation:

1. Department of Industrial and Systems Engineering, The Hong Kong Polytechnic University, 11 Yuk Choi Road, Hung Hom, Hong Kong

2. Department of Industrial and Manufacturing Systems Engineering’, The University of Hong Kong, HW 8-23, 8/F, Haking Wong Building, Pokfulam Road, Hong Kong

Abstract

In this paper, loss-averse consumer behavior during purchase decision-making process in the dual-channel supply chain is modeled. Loss-averse consumers prefer avoiding losses to gain utility with respect to their reference point while purchasing the product. Two product categories are classified: (1) basic product and (2) luxury goods which have lower and higher reference utility to consumers, respectively. The research objective is to determine the optimal price strategy in dual-channel supply chains and discuss the decision behind loss-averse consumers. To model consumers’ valuation of a product, prospect theory is adopted to calculate the demands of each channel. Then, the optimal pricing strategy and the corresponding profits are found out in a Stackelberg game manner. The results encourage manufacturers of basic goods to engage in dual-channel strategy. Effect of “double marginalization” is reduced if consumers are loss-averse in the dual-channel supply chain. Furthermore, the direct channel online contributes larger demand to the manufacturer. However, manufacturers of luxury goods are not suggested for dual-channel strategy because the demand for direct channel online is negligible and the demand for the retail channel remains unchanged. Nevertheless, retailers cannot obtain benefit from dual-channel and as a result, the profit of basic goods retailers will be reduced.

Publisher

World Scientific Pub Co Pte Lt

Subject

Management Science and Operations Research,Management Science and Operations Research

Cited by 12 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. The Incentive to Join in Customer-to-Manufacturer (C2M) Mode: Competition and Quality Differentiation;Asia-Pacific Journal of Operational Research;2024-05-14

2. Pricing Game Models of Hybrid Channel Supply Chain: A Strategic Consumer Behavior Perspective;Journal of Theoretical and Applied Electronic Commerce Research;2023-07-06

3. Dual-Channel Supply Chain Coordination with Loss-Averse Consumers;Discrete Dynamics in Nature and Society;2023-03-01

4. Dual-Channel Pricing Decisions for Product Recycling in Green Supply Chain Operations: Considering the Impact of Consumer Loss Aversion;International Journal of Environmental Research and Public Health;2023-01-18

5. Research on Pricing Strategy of Dual-Channel Retailers from the Perspective of Consumer Preference;2023 4th International Conference on E-Commerce and Internet Technology (ECIT 2023);2023

同舟云学术

1.学者识别学者识别

2.学术分析学术分析

3.人才评估人才评估

"同舟云学术"是以全球学者为主线,采集、加工和组织学术论文而形成的新型学术文献查询和分析系统,可以对全球学者进行文献检索和人才价值评估。用户可以通过关注某些学科领域的顶尖人物而持续追踪该领域的学科进展和研究前沿。经过近期的数据扩容,当前同舟云学术共收录了国内外主流学术期刊6万余种,收集的期刊论文及会议论文总量共计约1.5亿篇,并以每天添加12000余篇中外论文的速度递增。我们也可以为用户提供个性化、定制化的学者数据。欢迎来电咨询!咨询电话:010-8811{复制后删除}0370

www.globalauthorid.com

TOP

Copyright © 2019-2024 北京同舟云网络信息技术有限公司
京公网安备11010802033243号  京ICP备18003416号-3