Manufacturer selling mode choice for new‐version product introduction

Abstract

This paper constructs a game‐theoretic model to examine one manufacturer's optimal selling mode choice for the new‐version product between reselling and agency selling, given the old‐version product already sold in different selling modes ex ante. We find that the manufacturer would formulate reselling for the new‐version product when its unit production cost remains high but agency selling when such cost becomes low. Moreover, we show the manufacturer may be better off through discontinuing the sale of the old‐version product when selling modes are additionally considered. Finally, we discuss optimal selling mode choices from the aspect of the retailer.

Effectiveness of self‐run vs. third‐party sales channels on the consumers' purchase intention: A multi‐method exploration of the moderating role of review volume

“…Firstly, this research adds to the literature on online sales channels from the consumer's perspective. Prior research on online sales channels (including self‐run and third‐party channels) has been conducted primarily from the e‐tailers and manufacturers' perspectives, investigating how the choice of various sales channels may benefit them (P. Chen, Zhao, et al, 2021; Ha et al, 2022; Zhen & Xu, 2022; Zhong & Shen, 2022; Zhong et al, 2022). It is also critical for e‐tailers and third‐party sellers to understand the consumers' perceptions of and preferences for self‐run vs. third‐party channels.…”

“…Researchers have also considered various other aspects of sales mode selection. For example, the literature includes analyses of the effects of strategy (Ha et al, 2022; Zhen & Xu, 2022; Zhong et al, 2022; Zhong & Shen, 2022), new technology (Liu, Ma, Hu, & Zhang, 2021; Wu & Yu, 2022), costs (Shi et al, 2021; Zhong & Shen, 2022), information exchange (Ha et al, 2021; Tsunoda & Zennyo, 2021; Zhang & Zhang, 2020), platform fees and prices (Q. Chen, Liu, et al, 2021; Shi et al, 2021; Wei et al, 2021; Zhen & Xu, 2022), product promotion tactics (P. Chen, Zhao, et al, 2021), competition intensity at the retail level (Jerath & Zhang, 2010), types of online review information (Kwark et al, 2017), and information accuracy (Hagiu & Wright, 2015) on sales mode choice. Moreover, instead of adopting a pure reselling or agency selling strategy, many e‐tailers are rapidly transitioning to adopting both sales modes simultaneously (Fu et al, 2021; Yan et al, 2018).…”

“…However, the majority of earlier studies were carried out from the viewpoint of e‐commerce platforms or manufacturers to investigate how they might select between the two sales modes to obtain favorable outcomes (Belhadj et al, 2020; Wang et al, 2021). As an illustration, the operations literature has applied methods like game theory to examine how new technology (Liu, Ma, Hu, & Zhang, 2021; Wu & Yu, 2022), cost (Shi et al, 2021; Zhong & Shen, 2022), information exchange (Tsunoda & Zennyo, 2021; Zhang & Zhang, 2020), pricing and platform fees (Shi et al, 2021; Wei et al, 2021), and promotion strategy (P. Chen, Zhao, et al, 2021) affect e‐tailers' and/or the manufacturers' choices between different channels. In contrast, from a consumer perspective, we have very little knowledge of how consumers perceive and react to self‐run and third‐party channels.…”

Designing product upgrades in the presence of online consumer reviews

“…They find that single rollover is optimal when the amount of strategic customers is large, and strategic waiting behavior facilitates product improvement. Zhong and Shen (2022) study a manufacturer's determination of the optimal selling mode for the new generation product. Their findings indicate that the manufacturer choose reselling or agency selling based on the unit production cost.…”