Abstract
This paper explores a dual-channel supply chain under which manufacturers and retailers issue coupons in a two-stage promotion process for market size and profits. We attempt to investigate the role of coupons on pricing and channel competition by introducing a game model that includes three coupon issuing patterns: the manufacturer issuing, the retailer issuing, and co-issuing. Additionally, analysis and comparison of the strategies between different coupon issuing patterns are performed through an analytical approach and numerical study. Some new insights are as follows: The distribution of coupons increases the issuing channel’s price but decreases the competing channel’s price. The retailer's coupon promotion has a positive spillover effect on the manufacturer, while the manufacturer's coupon promotion may reduce the profit of the retailer. If the manufacturer offers coupons in the online channel, the best strategy for the retailer is to distribute coupons. The manufacturer owns channel advantage and obtains larger promotional effects when the manufacturer and retailer offer coupons simultaneously. The distribution of coupons does not absolutely increase the issuer’s profits but depends on the price sensitivity and redemption rate of coupons as well as competitor’s strategies. A bilateral revenue sharing contract can coordinate the dual-channel supply chain, and the retailer is more willing to reach the contract.
Published Version
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