Research Article Pricing Decisions of Competing Tobacco Enterprises with Online Channel

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1 Hndaw Publshng Corporaton Dscrete Dynamcs n Nature and Socety Volume 05 Artcle ID pages Research Artcle Prcng Decsons of Competng Tobacco Enterprses wth Onlne Channel Rong Zhang Jackson Jnhong M and Bn Lu Research Center of Logstcs Shangha Martme Unversty Shangha 0306 Chna School of Economcs and Management Shangha Martme Unversty Shangha 0306 Chna Correspondence should be addressed to Bn Lu; lubn@shmtu.edu.cn Receved 5 September 05; Accepted 4 November 05 Academc Edtor: Paolo Renna Copyrght 05 Rong Zhang et al. Ths s an open access artcle dstrbuted under the Creatve Commons Attrbuton Lcense whch permts unrestrcted use dstrbuton and reproducton n any medum provded the orgnal work s properly cted. Accordng to the new measurement of launchng onlne dstrbuton channels of tobacco enterprses n Chna ths paper nvestgates the tobacco frm s prcng decsons on the supply chan whch conssts of two manufacturers and one retaler under three dual-channel structures. Three dual-channel structures nclude no onlne channel only one onlne channel by one manufacture and two onlne channels by two manufacturers. We apply the Stackelberg game to analyze the equlbrum prcng strateges under dfferent structures and try to explore the necessty and advantages of launchng onlne sales channels. The results demonstrate that the substtutablty of a product has sgnfcant mpact on ntroducng onlne sales channels and the onlne dualchannel structure could result n less proft for manufacturers compared to the tradtonal retal channel structure; and thus a dual-channel structure wth onlne sales s not the best strategy for tradtonal manufacturers. Moreover when the product s less substtutable the effect of the tobacco control on the onlne sales channel s nferor to the tradtonal channels and vce versa.. Introducton Wth the popularty of the varous Internet applcaton onlne sales have become an mportant channel for product sales. Most enterprses that opt to launch a second sales channel on the Internet agree that onlne sales channels are compettve n prce and convenence when compared wth tradtonal sales channels. The Amercan Drect Marketng AssocatonstatesthatUSonlnesalestookup0.3%ofthe GDP n 005 whch accounted for approxmately 4% of the top factors n varous ndustres ncludng Hewlett-Packard IBM Eastman-Kodak Nke and Apple and have acheved onlne sales by means of onlne technology []. The products on onlne sales channel are dversfed changng gradually from electronc-domnant to varous ndustres-nvolved. In November 0 Chnese tobacco companes had a major polcy change by conductng tral onlne sales. A revew of the current domestc condtons n Chna shows that tobacco companes are affected by the natonal monopoly polcy whch holds that all products must be sold under the management of the Tobacco Monopoly Bureau. Ths causes a certan dstance wth market competton to occur. After Chna s accesson to the WTO and wth the gradual marketzaton of the tobacco market and relaxaton of the monopoly system tobacco leaf mport tarffs declned from 40% to 0% whereas tobacco product mport tarffs were reduced from 65% to 5% rasng the urgency of enhancng channel marketng. Currently a specal tobacco monopoly retal lcense s no longer requred allowng three mllon retalers wth the tobacco monopoly retal lcense to sell foregn cgarettes. Wth the prevalence of antsmokng campagns worldwde the foregn tobacco market has been greatly declned causng transnatonal tobacco gants to am ther sghts towards the Chnese market. In a report n 005 Morgan Stanley stated the followng: The monopoly structure wll be released after Chna enters nto the World Trade Organzaton. For leadng tobacco companes Chna s the last unexploted great power. Wth ths prospect Chnesetobaccoenterprsesshfttherfocustowardsyounger generaton and launch ther onlne channels. Chna s advertsng law prohbts tobacco advertsements n rados flms televsons newspapers and perodcals (journals); thus

2 Dscrete Dynamcs n Nature and Socety launchng marketng strateges on the Internet and by socal meda s the ratonal opton. In 009 Chna Hong Yun Hong He Group poneered the SNS-onlne-communty-concept based on tobacco-dgtal ntegrated promotonal marketng channels whch resulted n ncreased popularty for ther products. Currently tobacco onlne sales platforms have been establshed and have become popular across the country. Examples of these platforms nclude the tobacco-off ste ( a New Busness League onlne orderng platform X an Tobacco Monopoly Bureau webste platform ( and Jangsu tobacco onlne orderng platform ( Under Chna s tobacco monopoly system mode tobacco companes have a common vendor. Onlne sales now brng huge challenges to the tradtonal tobacco monopoly. For tobacco companes optng to go nto the onlne sales channel both the selecton of channel structure and prcng are essental. Ths paper prmarly refers to the topcs of dual-channel structure dual-channel product prcng and product substtutablty among whch the dual-channel structural problems occupy an mportant place n the academa. On the choce of the dual-channel structure Park and Keh [] compare chan profts under dfferent rghts structures such as drect marketng retal and mxed channels to assst manufacturers n makng the optmal channel selecton. The research shows that n mxed channels the profts ganed by manufacturers and retalers depend on the cost structure and benchmark market share. Adoptng mxed channels wll help manufacturers to ncrease the products overall demand and ther own profts and enhance the overall performance ofthesupplychanandsocalwelfare.changetal.[3]take nto account the degree of consumer acceptance n onlne channels to further analyze the mpact of the proft for supply chan members under onlne channels and ponted out that even wth no sales comng through the onlne channels the onlne channels can ncrease profts. Kumar and Ruan [4] beleve that vendors can gan profts from onlne channels assumng that the consumer s loyal to the brands or to the retalers. Ca [5] compares the nfluences of four knds of channels (sngle drect marketng sngle retal drect sales channels combned wth retal channels and dual-retaler channels) on manufacturers retalers and the entre supply chan and concludes that the use of dual channel combned wth onlne and retaler channels yelds more proft for manufacturers than the sngle onlne channel does whch under certan crcumstances yelded more proft than the sngle retal channel and that such dual channels asssted manufacturers and retalers n sezng the ntatve. In terms of studes on dual-channel prcng Yao and Lu [6] analyze the dual-channel prce competton for manufacturers and retalers under the Stackelberg and Bertrand games. Cattan et al. [7] revew three prcng strateges of manufacturers namely keepng wholesale prces stable prcng wholesale products wth retal prces unchanged and usng wholesale prce to obtan maxmzed profts. He found that when onlne channels are not convenent or sellng costs are too hgh manufacturers are lkely to mantan the dual channels at the same prce. Cachon and Kök [8] analyze the mpacts of wholesale prce contract quantty dscounts contract and two-part tarff contract on members of the supply chans when multple manufacturers sell through the same retaler. They pont out that although the last two types of contracts can coordnate the supply chan the wholesale prce contract can better allevate competton among manufacturers. Takng the prces of books and CD n the Swedsh market as objects Frberg et al. [9] nvestgate the relatonshp between such objects n tradtonal shops andthosenonlnestoresandfoundthattheprceofa product n a sngle onlne store was lower than that n a two-channel onlne shop. Zhang et al. [0] analyze the dualchannel structure substtutablty of products and channel poston and whether these factors nfluenced prcng for manufacturers and retalers. Lu et al. [] examne the effcacy of cost sharng n a model of two competng manufacturer retaler supply chans who sell partally substtutable products that may dffer n market sze. L et al. s [] study examnes a dual-channel supply chan n whch the manufacturer makes green products for the envronmental conscous and dscusses the prcng and greenng strateges for the chan members n both centralzed and decentralzed cases usng the Stackelberg game model under a consstent prcng strategy. Chen [3] apples the tradtonal and drect onlne channels as ts settng and evaluates the mpact of prce schemes and cooperatve advertsng mechansms on dualchannel supply chan competton. Furthermore Khouja and Zhou [4] analyze a supply chan of a servce provder who sells products and gft cards at face value at ts locatons. Cao et al. [5] develop an analytcal framework to study the mpact of an onlne-tostore channel on the demand allocatons and proftablty of a retaler who sells products to customers through multple dstrbuton channels. Ths paper also studes the substtutablty of the product because substtutablty s a key element n the competton between manufacturers or retalers. To dffer from other studes ths paper manly focuses on the two-channel structure of the supply chan and nvestgates the mode of two supplers sellng products by a common retaler.. Modelng Background We consder three types of dual-channel supply chan structures (Fgure ) the tradtonal two-manufacture-sngleretaler model sngle-manufacturer nvolved n onlne marketng model and two manufacturers nvolved n onlne marketng model. In the tradtonal model (Model A) manufacturers and retalers are both ndependent decsonmakng bodes and the decson-makng process s a twostage progress of the Stackelberg game. The products are avalable to consumers by the retalers. In the onlne model (Models B C and D) manufacturers launch onlne channels wth both manufacturers and retalers provdng products at the same tme. In Models A B C and D the manufacturer s the leader of the supply chan whereas retalers are the followers. Manufacturers operate cost c t n tradtonal channelsandthendecdethewholesaleprcew for the

3 Dscrete Dynamcs n Nature and Socety 3 M M M M M M M M R R R R Customers Customers Customers Customers Model A Model B Model C Model D Tradtonal channel Onlne channel Fgure : Supply chan structures n onlne channels and retal channels. retaler and the retaler sells ts products at retal prce p (where = representng dfferent manufacturers and retalers). We assume that manufacturer ( = ) sells dfferent products to unque retaler R. Wholesale prce s determned as w andretalerrsellstheproductstoconsumersnprce p. The prce under onlne channel s p o ( = ); D represents market demand of dfferent products; D o s on behalf of the market demand of products under the onlne channels and A sthebascdemandforeachproduct. We use the consumer utlty functon establshed by Ca [5] to obtan a dfferent product demand functon as follows: U (A D D = ) θd D p D () = where θ(0 θ<)denotes the product s substtutablty. When θ = 0 the products are purely monopolstc; when θ goestotheproductsconvergetopurelysubsttutable. Maxmzaton of () yelds the demand functon of two products as follows: D = A θa 3 p +θp 3 θ =. () For smplcty we assume that the manufacturer s producton costs and onlne channels operatng costs are zero andassumethatthemarketdemandforthebascproduct = ( ) s A = beng used to reflect that the two channels are symmetrcal. We have the followng notatons ( = ): η : the proporton of basc demand n onlne channel for manufacturer. η : the proporton of basc demand n onlne channel for manufacturer. Π o : the proft n onlne channels for manufacturer. Π : the proft n the whole supply chan for manufacturer. Π r : the proft for retalers. Therefore the proft functon of manufacturers and ther onlne channels and retalers can be wrtten as 3. Model Analyss Π m =w D Π o =p o D o Π =Π m +Π o Π r = = (p w )D. 3.. Model A: Dual-Channel Structure (MA). In the MA structure two manufacturers offer ther products to the retaler wth nether beng open onlne channels and consumers can only purchase products through retaler R. At ths pont the order of decson-makng s manufacturers M and M make ther wholesale prces w and w respectvely. After obtanng thewholesaleprceofbothproductsretalerslaunchthe retal prces p and p at the same tme. Accordng to () we know that the demand of the product s D = θ p +θp θ D = θ p +θp θ. Therefore the proft functon for retaler R s (3) (4) Π r = (p w ) D + (p w ) D. (5) Π m : the proft n tradtonal channels for manufacturer. The proft functon for manufacturers s Π MA w D = ( ). =Π MA m =

4 4 Dscrete Dynamcs n Nature and Socety Lemma. Under the MA structure two manufacturers offer ther own products to the retaler and the optmal wholesale and sales prces are decde the retal prces as p and p. Wth the demand functon model we obtaned earler a demand functon after the ntroducton of drect sales channels exsts as follows: w MA = θ θ p MA = 3 θ ( θ). Proof. See Appendx n onlne supplemental fle n Supplementary Materal avalable onlne at 05/448. It s easy to verfy that the retal prce s not lower than the wholesale prce w MA p MA as we have ( θ)/( θ) (3 θ)/( θ). (6) θ p +θ(p +p o ) θ (=) { θ+θ(p D (o) +p o ) p θ (=) { η ( θ) +θ(p +p ) p o { θ (o = o). The profts functon for manufacturers s Π MB =Π MB m +ΠMB o =w D +p o D o Π MB =Π MB m =w D. (7) (8) 3.. Model B: Dual-Channel Structure (MB). In the MB structure manufacturers M and M set wholesale prces w and w at the same tme and manufacturer M sets ts prce n onlne channel p o.afterobtanngw w andp o retalers Lemma. Under the MB structure two manufacturers offer ther own products to retalers and only manufacturer M launches onlne channel. The optmal wholesale and sales prces are w MB = ( θ)(8 (4 8η )θ (3+6η )θ (3+η )θ 3 ) (8 8θ 5θ +5θ 3 +4θ 4 ) w MB = ( θ) (4 (3 η )θ+( η )θ ) 8 6θ+θ +4θ 3 = 4 4 (7 4η ) θ (5 + η )θ +(7+η )θ 3 +(6+4η )θ 4 4(8 8θ 5θ +5θ 3 +4θ 4 ) p MB (9) = 4 4 (7 3η )θ (+6η )θ +(9 6η )θ 3 +(+6η )θ 4 4(8 8θ 5θ +5θ 3 +4θ 4 ) p MB o = ( θ)(+θ)(7θ 5θ +η ( 3θ + θ )). (8 8θ 5θ +5θ 3 +4θ 4 ) p MB Proof. See Appendx n onlne supplemental fle. w MB The retal prce s not lower than the wholesale prce p MB as we have θ (0 3/00) Model C: Dual-Channel Structure (MC). In MC structure manufacturers M and M determne wholesale prces as w and w. Meanwhle the manufacturer M sets ts prce n onlne channel p o.afterobtanngw w andp o retalers decde the retal prces as p and p.smlarwth Model B a demand functon after the ntroducton of drect sales channels exsts: θ p +θ(p +p o ) θ (=) { θ+θ(p D (o) +p o ) p θ (=) (0) { η ( θ) +θ(p +p ) p o { θ (o = o).

5 Dscrete Dynamcs n Nature and Socety 5 The profts functon for manufacturers s Π MC =Π MC m =w D Π MC =Π MC m +ΠMC o =w D +p o D o. () Lemma 3. Under the MC structure two manufacturers offer ther own products to retalers and only manufacturer M launches onlne channels. The optmal wholesale and sales prces are w MC = ( θ) (4 (3 η )θ+( η )θ ) 8 6θ + θ +4θ 3 w MC = ( θ)(8 (4 8η )θ (3+6η )θ (3+η )θ 3 ) (8 8θ 5θ +5θ 3 +4θ 4 ) p MC = 4 4(7 3η )θ (+6η )θ +(9 6η )θ 3 +(+6η )θ 4 4 (8 8θ 5θ +5θ 3 +4θ 4 ) () p MC = 4 4(7 4η )θ (5+η )θ +(7+η )θ 3 +(6+4η )θ 4 4 (8 8θ 5θ +5θ 3 +4θ 4 ) p MC o = ( θ)(+θ)(7θ 5θ +η ( 3θ + θ )). (8 8θ 5θ +5θ 3 +4θ 4 ) Proof. See Appendx n onlne supplemental fle. w MC The retal prce s not lower than the wholesale prce p MC aswehaveθ (0 3/00) Model D: Dual-Channel Structure (MD). In the MD structure manufacturers M and M determne wholesale prces as w and w at the same tme; manufacturers M and M both launch ther onlne channels and decde the onlne channel prce as p o and p o.afterobtanngw and w and p o and p o retaler R decdes the retal prces as p and p. Smlar to Models B and C a demand functon of dual channels exsts: Lemma 4. Under the MD structure two manufacturers offer ther own products to retalers and both manufactures launch onlne channels. The optmal wholesale and sales prces are w MD =( θ) (6 8(3 η η )θ+( 4η )θ +(3 η +η )θ 3 ) (64 9θ +6θ + 40θ 3 7θ 4 39θ 5 ) w MD =( θ) (6 8(3 η η )θ+( 4η )θ +(3+η η )θ 3 ) (64 9θ D (o) θ p +θ(p +p o +p o ) θ (=) +6θ + 40θ 3 7θ 4 39θ 5 ) p MD = (96 6 (9 3η 4η )θ+4(65 8η { θ+θ(p +p o +p o ) p θ η ( θ) +θ(p +p +p o ) p o θ (=) (o = o) { η ( θ) +θ(p +p +p o ) p o { θ (o = o). Profts for manufacturers are Π MB =Π MB m +ΠMB o =w D +p o D o Π MC =Π MC m +ΠMC o =w D +p o D o. (3) (4) 48η )θ ( 3η 9η )θ 3 (4 46η +54η )θ 4 (3+8η +η )θ 5 ) ( (64 9θ +6θ + 40θ 3 7θ 4 39θ 5 )) p MD = (96 6 (9 4η 3η )θ+4(65 48η 8η )θ ( 9η 3η )θ 3 (4+54η 46η )θ 4 (3+η +8η )θ 5 ) ( (64 9θ +6θ + 40θ 3 7θ 4 39θ 5 ))

6 6 Dscrete Dynamcs n Nature and Socety p MD o = ( θ) (4η (8 4θ + 7θ +3θ 3 4θ 4 ) + θ (56 96θ + 9θ + 5θ 3 +η (8 8θ 5θ +5θ 3 ))) (64 9θ + 6θ + 40θ 3 7θ 4 39θ 5 ) p MD o = ( θ) (4η (8 4θ + 7θ +3θ 3 4θ 4 ) + θ (56 96θ + 9θ + 5θ 3 +η (8 8θ 5θ +5θ 3 ))) (64 9θ + 6θ + 40θ 3 7θ 4 39θ 5 ). Proof. See Appendx n onlne supplemental fle. w MD (5) Theretalprcesnotlowerthanthewholesaleprce as we have θ (0 (/3)(6 0)). p MD 4. Equlbrum Analyss Models B and C are symmetrc channel structures; therefore we only consdered one. Under the three categores of the dual-channel model we wll analyze the optmal prcng decsons channel demand and channel profts and further analyze the nfluence of the ntroducton of onlne channels to manufacturers. 4.. Symmetrc Basc Demand. Under ths case we suppose that both manufacturers have the same proporton of basc demandnonlnedrectmarketng;thatsη = η.the followng proposton can be obtaned through mathematcal analyss of the thrd secton. Proposton 5. Only when θ (0 (/3)(6 0)) s the manufacturer s wholesale prce w 0 n the four-channel model and demand D > 0 fulflled; Models A B and D channel can coexst smultaneously. Meanwhle ncreasng onlne sales channels can ncrease the overall profts of the manufacturers as the followng relatonshp: w MD D MD Π MD Π MD r >w MB >D MB >Π MB >Π MB r >w MA >D MA >Π MA >Π MA r. Proof. See Appendx n onlne supplemental fle. (6) We can conclude that two manufacturers ncreasng onlne access smultaneously can obtan more profts than ndvdual manufacturers durng onlne channels. The more alternatves of the products are avalable the hgher the profts are through onlne channels. Proposton 6. When θ ((/3)(6 0) 3/00) manufacturers wholesale prces under MD channel mode are negatve whch cannot satsfy realty. Only Models A B and C exst on the market. Proof. See Appendx n onlne supplemental fle. When θ ((/3)(6 0) 3/00)wecangetΠ MB > Π MA. Even though manufacturer m does not launch onlne channels the profts under Model MB are more than that under Model MA: Π Δm =Π MB Π MA = (θ )(/ ( θ) (4 θ(6 η( θ) θ)) /(8 θ(6 θ 4θ )) ). (+θ) (7) Manufacturer m that opened onlne channels gans more profts than manufacturer m : Π Δ =Π MB Π MB = θ (35 8θ 5θ )+4η ( θ) (4 θ ) + ηθ (4 5θ + θ 3 ) 8 (+θ). (8) (8 6θ + θ +4θ 3 ) Thus when the substtuton of the products remans at a certan range launchng onlne channels can be benefcal to the opposte whch wll beneft both sdes. Proposton 7. When θ > 3/00 the onlne channel prce under onlne channels s p MB o < 0 but t does not satsfy realty. Only tradtonal channels MA exst on the market; the profts n onlne channels can be affected by alternatves of the products and onlne channels do not apply to any stuaton. Proof. See Appendx n onlne supplemental fle.

7 Dscrete Dynamcs n Nature and Socety Asymmetrc Basc Demand. Under ths case we suppose that both manufacturers have the dfferent proporton of basc demand n onlne drect marketng; that s η =η.the model nvolves varous demand combnatons and constrant condtons. Therefore to analyze the models more ntutvely several specfc examples of the models are gven below to analyze the nfluence of the replacement rate of products anddstrbutonrateofonlnedemandonmanufacturers and retalers and to examne how both rates affect the access tactcs for onlne channels. The parameters meet θ (0 ); η (0); η (0).Wecanseethatwhenη =η for example η =/ η =/4 the concluson meets our earler results Analyss of Consumer Welfare and Tobacco Control. Based on the earler concluson we further compared the levels of consumer welfare under Models MA MB and MD. In the MA channel mode when θ (0 ) theconsumer utlty value U MA >0 and wth the ncrease of θthevalueof U MA also ncreased gradually. In the onlne channel model theutltyvalueofu MB and U MD ndcated a decrease after anncreaseandtheutltyvalueoftheonlnechannelss larger when the alternatve of products s smaller. We also compared the effects η on consumer welfare. In addton to ncreasng η theutltyvalueofu decreases whle the replacement rate of products θ s constantly reduced. Therefore we can conclude that when the substtuton of products s smaller consumer s welfare n the onlne channel s hgher than n tradtonal channels and the effect of tobacco control s worse. Wth the ncrease n the product s substtuton the consumer s welfare n tradtonal channel becomes ncreasngly hgher than n the onlne channels whle the consumer s welfare becomes much lower wth tobacco control havng better effect than n tradtonal channels. 5. Conclusons and Future Research Ths paper takes tobacco supplers and retalers as ts man objects. Manufacturers have to not only decde whether to use onlne channels when they have only one common retaler but also consder carefully how much proft they can gan from onlne channels. Ths paper shows that not all companes who open onlne channels can gan profts. The key element for openng onlne channels s the substtuton of products and dstrbuton of onlne channels demand. Manufacturer can gan hgher profts wth sellng smaller substtuton products ncludng that through onlne channel. When the substtuton of the products s beyond a certan rangetsunproftabletoopenonlnechannels.completely abandonng tradtonal channels to open onlne channels also results n unproftable prospects for manufacturers. We analyzed the mpact of tobacco control under dfferent channels on products control. In tradtonal channels as the substtutablty of products ncreased better consumer welfareresultednamorenegatveprospectfortobacco control. Under onlne channels the ncrease n substtutablty of the products and the demand for products n onlne channels resulted n poorer consumer welfare whch s a more optmstc prospect for tobacco control. Although ths paper compares the profts of supplers and a retaler n tradtonal and onlne channels as well as the consumer welfare levels n dfferent channels the paper has several defcences and areas that can be consdered for future research. Frst ths paper assumes the exstence of only two manufacturers and one retaler. Future studes areexpectedtotakentoaccountmultplesupplersand retalers and that assumpton wll be practcal. Secondly to facltate research ths paper does not consder the more general stochastc demand newsboy model and uses the lnear demand functon wth the assumpton that the strength oftwochannelsssymmetrcal.thrdthspaperdoesnot account for cost. Further studes could consder operatng costs such as shppng cost under tradtonal and onlne channels and nvestgate the effcency of dfferent operaton modes under dfferent shppng polces. The competton between tradtonal and onlne channels wll also be mportant research drectons n the future. Lastly t s mportant for the tobacco frms to take the corporate socal responsblty so t s worth for the tobacco frm to study how to balance the busness development and corporate socal responsblty. Conflct of Interests The authors declare that there s no conflct of nterests regardng the publcaton of ths paper. Acknowledgments ThsworkssupportedbyNatonalNaturalScenceFoundaton of Chna Grant nos. U and 7577 and Innovaton Ablty Constructon projects for Shangha Unversty ( ). References [] A. A. Tsay and N. Agrawal Channel conflct and coordnaton nthee-commerceage Producton and Operatons Managementvol.3no.pp [] S. Y. Park and H. T. Keh Modellng hybrd dstrbuton channels: a game-theoretc analyss Retalng and Consumer Servcesvol.0no.3pp [3] W.-Y.K.ChangD.ChhajedandJ.D.Hess Drectmarketng ndrect profts: a strategc analyss of dual-channel supplychan desgn Management Scencevol.49no.pp [4] N. Kumar and R. Ruan On manufacturers complementng the tradtonal retal channel wth a drect onlne channel Quanttatve Marketng and Economcs vol.4no.3pp [5] G. G. Ca Channel selecton and coordnaton n dual-channel supply chans Retalngvol.86no.pp [6] D.-Q. Yao and J. J. Lu Compettve prcng of mxed retal and e-tal dstrbuton channels Omegavol.33no.3pp [7] K. Cattan W. Glland H. S. Heese and J. Swamnathan Bolng frogs: prcng strateges for a manufacturer addng a drect channel that competes wth the tradtonal channel

8 8 Dscrete Dynamcs n Nature and Socety Producton and Operatons Management vol.5no.pp [8] G. P. Cachon and A. G. Kök Competng manufacturers n a retal supply chan: on contractual form and coordnaton Management Scencevol.56no.3pp [9] R.FrbergM.GanslandtandM.Sandström Prcng Strateges n E-Commerce: Brcks vs. ClcksIUITheResearchInsttuteof Industral Economcs 00. [0] R. Zhang B. Lu and W. Wang Prcng decsons n a dual channels system wth dfferent power structures Economc Modellngvol.9no.pp [] B. Lu G. G. Ca and A. A. Tsay Advertsng n asymmetrc competng supply chans Producton and Operatons Managementvol.3no.pp [] B. L M. Zhu Y. Jang and Z. L Prcng polces of a compettve dual-channel green supply chan Cleaner Producton05. [3] T.-H. Chen Effects of the prcng and cooperatve advertsng polces n a two-echelon dual-channel supply chan Computers & Industral Engneerngvol.87no.9pp [4] M. Khouja and J. Zhou Channel and prcng decsons n a supply chan wth advance sellng of gft cards European Operatonal Research vol.44no.pp [5] J.CaoK.C.SoandS.Yn Impactofan onlne-to-store channel on demand allocaton prcng and proftablty European Operatonal Research vol.48no.pp

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