The effects of a "no-haggle" channel on marketing strategies
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
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Detail(s)
Original language | English |
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Pages (from-to) | 434-443 |
Journal / Publication | International Journal of Research in Marketing |
Volume | 31 |
Issue number | 4 |
Publication status | Published - 1 Dec 2014 |
Link(s)
Abstract
As sellers increasingly turn to multi-channel retailing, the opportunity to implement different pricing policies has grown. With the advent of the internet, many traditionally bargained products such as automobiles, jewelry, watches, appliances and furniture are now being offered online at a fixed pre-determined price. We explore the strategy of simultaneously offering two pricing formats (fixed and bargained) via two different channels (online and brick and mortar) and find that in a market where there are two types of consumers-those with a high cost of haggling and others with a lower cost-a dual-pricing strategy is optimal only when there are enough high haggling-cost consumers, but not too many, and when the haggling costs between the two types of consumers are sufficiently different. We also find that it is optimal for the seller to specify a higher-than-cost minimum acceptable price as the price floor of bargaining. By doing so, the seller increases the bargained price by complementing the salesperson's bargaining ability, and also softens the internal competition between the two channels. Finally, we find that, surprisingly, the dual-pricing strategy may serve fewer customers while still being more profitable than a single price structure. The implications for consumer surplus are also explored.
Research Area(s)
- Bargaining, Channel relationships, Pricing
Citation Format(s)
The effects of a "no-haggle" channel on marketing strategies. / Zeng, Xiaohua; Dasgupta, Srabana; Weinberg, Charles B.
In: International Journal of Research in Marketing, Vol. 31, No. 4, 01.12.2014, p. 434-443.
In: International Journal of Research in Marketing, Vol. 31, No. 4, 01.12.2014, p. 434-443.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review