Channel Pricing Strategy under Retailer Differentiation

With the development of retailer power, the effect of retailer on channel pricing strategy becomes stronger and stronger. We study the problem of channel pricing strategy in the channel with single manufacturer and double retailers under retailer differentiation. We abstract retailer differentiation into retailer brand and retail cost differentiation. Moreover, we consider the effect of demand function and channel power structure on channel pricing strategy. The research results are as follows. Whichever the manufacturer or retailer is the leader in the channel will result in the increase of retail price, and the leader in channel will get more profits from the channel than the follower. The retailer brands are more differentiated, the retail prices and the profits of retailer are higher, and the profits of manufacturer are lower. The retail cost are more differentiated, the profit of manufacture are higher, the profit of retailer with cost advantage are higher and the profit of retailer with cost disadvantage are lower, except that the retail price of the retailer with cost disadvantage under manufacturer Stackelberg power structure are higher, retail price under other power structures are lower.