Decision-making Analysis on the Choice of Distribution Channel Strategy under E-commerce Circumstance

Abstract

With the rapid development of e-commerce and network, many manufacturers redesign their distribution channel through adding e-market based on traditional channel. This paper develops the aggregate demand function under hybrid dual channel based on consumer utility theory, analyzes the pricing strategy and profit under different channel by using game theory. The result shows that when the purchase cost from e-market is relative low, manufacture's optimal channel strategy is dual channnel; when the cost is relative high, the optimal channel strategy is single traditional channel. Finally the conclusion is demonstrated through numerical illustration.