Pricing Decision Making and Coordination of a Dual-Channel Supply Chain Considering Online Reviews and Channel Preferences

Abstract

Many problems regarding channel conflicts exist in the pricing process of a manufacturer-led dual-channel supply chain in view of online reviews. By considering the fact that online reviews and channel preferences are two important factors that influence consumer purchasing behaviors and the decision-making of the supply chain, this paper deals with these problems through the development of a model involving online reviews and degrees of channel preferences. It then analyzes optimal decisions under either decentralized or centralized decision-making scenarios. And, it discusses the effect of online reviews and channel preferences on the performance of the supply chain. Based on the developed model, this paper designs a revenue-sharing contract coordination. The derived results show that the investment in online review services and the degree of channel preferences can exacerbate the conflict of channels. And it shows what our proposed coordination mechanism could do about the aforementioned conflict problems and how it optimizes the overall profitability of the supply chain.

Keywords: Online review, service level, channel preference, coordination mechanism