Abstract
This paper analyzes how the bargaining power in supply chain affects marketing channel strategies of a manufacturer when it considers a direct online channel using a simulation method, and discusses some strategic implications from the perspective of market transaction costs and the portion of online customers. This paper shows interesting results: when relative online purchasing cost is very low, a manufacturer chooses a matching strategy, when online purchasing cost is moderate, it chooses a hybrid channel strategy rather than a price matching strategy, and it chooses offline strategy only when online purchasing cost becomes high.
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