Pricing Decision after Online Channel Introduction

Online channel can provide a chance for manufacturer to increase sales and reduce cost. Based on the consideration of the acceptance difference of online channel for consumers, we discuss the dual pricing problem after online channel introduction for the channel structure of single manufacturer and retailer. Some results are derived: Online channel will help retailer reduce retail price and increase sales. When the acceptance degree of online channel is high enough, online channel can increase profit for the manufacturer. The best pricing strategy for the manufacturer is to set a reasonable wholesale price and direct price in order to ensure no sale online. When the proportion of consumers with high acceptance degree on online channel is big, online channel can benefit the manufacturer and retailer at the same time if the acceptance degree of online channel is high enough.