Pricing strategy for B&M store in a dual-channel supply chain based on hotelling model

• 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.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Nyckelord

Showrooming

store-brand strategy

hotelling model

pricing theory

retail supply chain

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