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Research for pricing and selling strategies in channel management

Author(s): Song Fengsen

Pricing for products needs to consider comprehensively a variety of factors, including product costs, consumer preferences, and competitor reactions. In particular, based on the perspective of channel management, how to conduct a reasonable pricing in traditional enterprise—retailer sales channels directly relates to retails’ marketing strategies and sales results. This paper attempts to build a pricing and sales strategy model from the perspective of channel management, of which the main body includes manufacturers, retailers and consumers. Based on Stackelberg’s game model, this model adopts backtracking reasoning methods, investigating retailers’ optimal behaviors and then using backward induction to find out manufacturers’ optimal pricing model. The model focuses on the case of consumers’ discrete preferences, and the market equilibrium analysis shows that it is practical for manufacturers and retailers to take bundling selling strategy at the same time under specific parameter values, and this bundling strategy is beneficial for the entire channel to get maximum profit. However, traditional sales channels possess characteristic of inefficiency, so it is unlikely for manufacturers and retailers to take bundling strategy simultaneously

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