Mixed Channel Strategy for Manufacturers to Cope with Strong Retailers in Supply Chain

Abstract

Abstract:

In the supply chain with only traditional channel, a strong retailer can dominate the competition with manufacturers by controlling purchase price. Aiming at this issue, this paper develops a mixed channel strategy for manufacturers to cope with the competition from traditional retailers through adding direct channel or electronic retail channel and builds a model for manufacturers to select channels. Based on the influence of channel difference on consumer utility, optimal decisionmaking model of supply chain with only a traditional channel and Stackelberg game models of supply chain members in the two kinds of dualchannel supply chains are built. The results show that the choice between the two mixed channel strategies depends on the cost structure of the electronic channels and the evaluation of consumers on the product. Strong retailer can no longer dominate the competition by controlling purchase price if the manufacturer adds an electronic channel. Given that more consumers will accept electronic channel when ecommerce becomes more popular, manufacturers can build electronic channel earlier to weaken the resistance of traditional retailers and promote the benign development of the supply chain.

Key words: dual-channel supply chain, manufacturer, channel selection, strong retailer

Dan Bin, Qu Zhenjing, Zhang Haiyue, Liu Can, Zhang Xumei. Mixed Channel Strategy for Manufacturers to Cope with Strong Retailers in Supply Chain[J]. , 2016, 28(12): 213-224.

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