Choice of Distribution Channels for Experience Products Using Virtual Reality

Abstract

Research on product distribution channels has mainly focused on channel cost, risk aversion, consumer fairness preference, price decision, channel coordination, and channel selection while paying less attention to the product experience. Compared with offline channels, the online channel is at a disadvantage with regards to the product experience. For experience products, consumers cannot accurately access the value of the products through online channels because of its virtuality. In contrast, offline channels can attract more consumers with real product experience. However, the application of virtual reality technology has become increasingly more extensive in recent years. Virtual reality technology enhances the interaction level between online consumers and experience products, and it can help consumers assess product value more accurately, which has a greater impact on consumers’ purchase decisions. Manufacturers can make full use of virtual reality technology to expand online sales. To maximize the manufacturers’ revenue, this paper uses consumer utility theory and game theory to design four experience products’ distribution channel models and analyzes the relationship between the manufacturers’ revenue in different distribution channel models and virtual reality technology. The results show when the interaction level of virtual reality technology is low, manufacturers tend to choose a dual distribution channel, but when the interaction level of virtual reality technology is high, a single online distribution channel is the best choice for manufacturers.