Dynamic pricing and coupon promotion strategies in a dual-channel supply chain based on differential game

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zonghuo Li ◽  
Wensheng Yang ◽  
Yinyuan Si
Keyword(s):  
Supply Chain ◽  
Differential Game ◽  
Dynamic Pricing ◽  
Brand Image ◽  
Content Type ◽  
Dual Channel ◽  
Promotion Policies ◽  
Promotion Strategies ◽  
Joint Pricing ◽  
Dual Channel Supply Chain

PurposeThis paper investigates a dual-channel supply chain in which a manufacturer offers coupons in the online channel and the retailer in the offline channel. The optimal pricing and coupon promotion policies are explored, and the brand image under different promotion scenarios is studied.Design/methodology/approachThree differential game models, namely no coupon is offered, coupons offered by the manufacturer and coupons offered by the retailer, are constructed.FindingsThe results show that the manufacturer and retailer intend to conduct coupon promotions under a large coupon redemption rate. Coupon promotion derives a higher price and profit for the issuers, and the manufacturer can free-ride on the retailer's coupon promotion. The retailer's profit in the retailer-promotion scenario may be lower than that in the manufacturer-promotion scenario in some special conditions. Besides, price, coupon face value, brand image and profit increase over time. After multiple cycles game, the operational strategy evolves to an optimal equilibrium status.Originality/valueThis paper provides guidance and advice for dual-channel supply enterprises to implement joint pricing and coupon promotion strategies under multiple sales seasons.

PRICING AND INVENTORY STRATEGIES FOR A TWO-STAGE DUAL-CHANNEL SUPPLY CHAIN

2012 ◽  
Vol 29 (01) ◽  
pp. 1240004 ◽  
Author(s):  
RUN H. NIU ◽  
XUAN ZHAO ◽  
IGNACIO CASTILLO ◽  
TARJA JORO
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Product Line ◽  
Two Stage ◽  
Web Based ◽  
Dual Channel ◽  
Eoq Model ◽  
Joint Pricing ◽  
Dual Channel Supply Chain ◽  
Offline Channels

The Internet is becoming increasingly important as a sales channel. Thus, most large retail firms have adopted a multi-channel strategy that includes both web-based channels and pre-existing offline channels. In this paper, we consider joint pricing and inventory/production decision problems for members in a monopoly two-stage dual-channel retailer supply chain. For a dual-channel retailer, pricing in one channel will affect the demand in the other channel. This subsequently affects the retailer's replenishment (ordering) decisions, which have an impact on the producer's inventory/production plans and wholesale price decisions. It is clear then that pricing decisions and inventory/production decisions are interacting in each member of the supply chain and among the members in the chain as well. In this paper, we analyze joint pricing and inventory/production problems under three scenarios by incorporating intra-product line price interaction in the EOQ model. We show that a unique equilibrium exists under certain realistic conditions. We also provide numerical results that offer insights for pricing strategies for the dual-channel retailer supply chain and for product design for different channels.

The pricing strategy of dual-channel supply chain with risk-averse agents and heterogeneous preference consumers

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rufeng Wang ◽  
Zhiyong Chang ◽  
Shuli Yan
Keyword(s):  
Supply Chain ◽  
Risk Control ◽  
Optimal Strategies ◽  
Risk Attitude ◽  
Risk Attitudes ◽  
Risk Averse ◽  
Content Type ◽  
Dual Channel ◽  
Heterogeneous Preference ◽  
Dual Channel Supply Chain

PurposeThe purpose of this paper is to investigate the pricing strategy and the impact of agents' risk preference in a dual-channel supply chain in which both agents are risk-averse.Design/methodology/approachThe authors make use of the mean-variance (MV) method to measure the risk aversion of the agents and apply Stackelberg game to obtain the optimal strategies of the proposed models. Furthermore, the authors compare the optimal strategies with that in the benchmark model in which no agent is risk-averse.FindingsThe authors find that the pricing decisions can be divided into four categories according to the risk attitudes of the agents: the decisions that are independent of two agents' risk attitudes, the decisions that depend on only one agent’s risk attitude (i.e. depend on only manufacturer's risk attitude and depend on only retailer's risk attitude) and the decisions that depend on both agents' risk attitudes. In addition, the authors find that the retail price will be lower and the wholesale price in most cases will be lower than that in the benchmark when at least one agent's risk control is effective; the demand will be always increasing as long as one agent's risk control is effective. Furthermore, compared to the benchmark, a win-win strategy (i.e. Pareto improvement) for the supply chain members can be obtained in a certain range where the agents' risk controls are appropriate.Originality/valueThis research provides a theoretical reference for the managers to make the pricing decisions and the risk control in dual-channel supply chains with heterogeneous preference consumers.

Impact of wholesale price discrimination by the manufacturer on the profit of supply chain members

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rofin TM ◽  
Biswajit Mahanty
Keyword(s):  
Supply Chain ◽  
Price Discrimination ◽  
Wholesale Price ◽  
Price Strategy ◽  
Content Type ◽  
Dual Channel ◽  
Channel Preference ◽  
Online Channel ◽  
Dual Channel Supply Chain ◽  
The Impact

PurposeThe purpose of this paper is to investigate the impact of wholesale price discrimination by a manufacturer in a retailer–e-tailer dual-channel supply chain for different product categories based on their online channel preference.Design/methodology/approachThis paper considers a dual-channel supply chain comprising of a retailer and an e-tailer engaged in competition. Game-theoretic models are developed to model the competition between the retailer and e-tailer and to derive their optimal price, optimal order quantity and optimal profit under (1) equal wholesale price strategy and (2) discriminatory wholesale price strategy. Further, a numerical example was employed to quantify the results and to capture the variation with respect to online channel preference of the product.FindingsIt is beneficial for the manufacturer to adopt a discriminatory wholesale price strategy for products having both high online channel preference and low online channel preference. However, equal wholesale price strategy is beneficial for the e-tailer and the retailer in the case of products having high online channel preference and in the case of products having low online channel preference, respectively.Practical implicationsThe study helps the manufacturers to maximize their profit by adopting the right wholesale price strategy considering the online channel preference of the product when the manufacturers are supplying to heterogeneous retailers.Originality/valueThere is scant literature on the wholesale price strategy of the manufacturer considering the heterogeneous downstream retailers. This paper contributes the literature by bridging this gap. In addition, the study establishes a link between the wholesale price strategy and online channel preference of the product.

A collaborative scenario-based decision model for a disrupted dual-channel supply chain

2019 ◽  
Vol 27 (3) ◽  
pp. 933-957 ◽  
Author(s):  
Jafar Heydari ◽  
Amin Aslani ◽  
Ali Sabbaghnia
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Distribution Systems ◽  
Channel Coordination ◽  
Content Type ◽  
Pricing Decisions ◽  
Collaboration Model ◽  
Dual Channel ◽  
Decentralized Decision Making ◽  
Dual Channel Supply Chain

Purpose Distribution systems usually utilize both traditional retailing channels in conjunction with e-channels. The purpose of this paper is to investigate a dual-channel supply chain, comprising a traditional retailing channel and an e-channel under disruption. By benchmarking against the centralized decision structure, the authors intend to propose a collaboration model to achieve channel coordination as well as more reliable decisions. Design/methodology/approach Four different channel disruption scenarios, with customers’ reaction toward disruptions, are examined, and then, optimal pricing decisions for both centralized and decentralized decision-making structures are extracted. Next, a collaboration mechanism based on the dominancy power of channel members is developed to entice all channel members to participate in channel coordination. By benchmarking the proposed collaboration model against both the decentralized/centralized structures a win–win solution is guaranteed for all channel members. In addition, the proposed model ensures more reliable decisions than the centralized structure, as it guarantees less fluctuated income levels. Findings This study shows, as the disruption probability grows, the channel profit decreases while the channel-retailing price increases. Furthermore, the exact alignment of the centralized decision-making approach and the proposed collaboration model is not achievable due to the problem infeasibility. Numerical experiments and sensitivity analyses benchmark the performance of the proposed collaboration mechanism against the centralized structure for the full alignment with centralized decision-making approach. Originality/value This study contributes to the channel conflict literature as jointly considers pricing decisions, disruptions and coordination. Further, consumers’ reaction toward disruption is analyzed through a transshipment agreement.

Impact of price adjustment speed on the stability of Bertrand–Nash equilibrium and profit of the retailers

Kybernetes ◽  
2018 ◽  
Vol 47 (8) ◽  
pp. 1494-1523
Author(s):  
Rofin T.M. ◽  
Biswajit Mahanty
Keyword(s):  
Supply Chain ◽  
Nash Equilibrium ◽  
Chaotic Dynamics ◽  
Price Adjustment ◽  
Online Retailer ◽  
Content Type ◽  
Dual Channel ◽  
Adjustment Speed ◽  
The Stability ◽  
Dual Channel Supply Chain

Purpose The purpose of this paper is to investigate the impact of price adjustment speed on the stability of Bertrand–Nash equilibrium in the context of a dual-channel supply chain competition. Design/methodology/approach The paper considers a dual-channel supply chain comprising a manufacturer, a traditional retailer and an online retailer. A two-dimensional discrete dynamical system is used to examine the Bertrand competition between the retailers. The retailers are assumed to follow bounded rational expectations. Local stability of Bertrand–Nash equilibrium is investigated with respect to the price adjustment speed. Findings As the price adjustment speed increases, the stability of Bertrand–Nash equilibrium is lost, leading to complex chaotic dynamics. The results showed that chaotic dynamics deteriorates the profit of the retailers. The authors also found that the chaos can be controlled using an adaptive adjustment mechanism and the retailers enjoy higher profit when the chaos is controlled. Practical implications This study helps retail managers to choose an appropriate price adjustment speed to maximize profit. Originality/value The heterogeneity of the retailers is not considered in the studies involving dynamics of retailer competition. This paper contributes to the literature by considering the operational difference between a traditional retailer and an online retailer, i.e. price adjustment speed. In addition, the study establishes a link between price adjustment speed and profit.

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