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Pricing strategy for B&M store in a dual-channel supply chain based on hotelling model
Stockholm University, Faculty of Social Sciences, Stockholm Business School. University of Chinese Academy of Sciences, People’s Republic of China.
Number of Authors: 42021 (English)In: International Journal of Production Research, ISSN 0020-7543, E-ISSN 1366-588X, Vol. 59, no 18, p. 5578-5591Article in journal (Refereed) Published
Abstract [en]

We use hotelling model to analyse store brands as a strategy for B&M (brick-and-mortar) retailers to combat showrooming. We investigate how national-brand product mismatch and store-brand awareness affect supply chain's performance. We reach four major conclusions. First, store-brand strategy may be an effective means for B&M stores to mitigate showrooming. However, it's better to introduce premium store brands. Second, the B&M store's profit grows - and the online store's profit declines - as national-brand product mismatch increases in breadth. When many consumers feel the national-brand product does not match their needs, a product positioning strategy for the store brand can help B&M retailers improve profit margins. Third, as national-brand product mismatch increases in depth, the B&M store's profit rises and online store's profit falls. If national-brand products lack many features that consumers need, a product differentiation strategy can be implemented to use store brands to fill in the gaps left by national brands. Finally, the growth of store-brand awareness will not necessarily benefit the B&M store. The impact of store-brand awareness on the B&M store's profit depends on the hassle cost factort, and a brand promotion strategy will reduce the loss of B&M retailer's profit.

Place, publisher, year, edition, pages
2021. Vol. 59, no 18, p. 5578-5591
Keywords [en]
Showrooming, store-brand strategy, hotelling model, pricing theory, retail supply chain
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:su:diva-186394DOI: 10.1080/00207543.2020.1787536ISI: 000570418500001OAI: oai:DiVA.org:su-186394DiVA, id: diva2:1499502
Available from: 2020-11-09 Created: 2020-11-09 Last updated: 2022-02-25Bibliographically approved

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Wu, Desheng DashDolgui, Alexandre

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CiteExportLink to record
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  • apa
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