Reward the inductor or inductee? The effect of the inductee's altruism on a shopping guide platform
Asia Pacific Journal of Marketing and Logistics
ISSN: 1355-5855
Article publication date: 30 November 2021
Issue publication date: 9 September 2022
Abstract
Purpose
This study highlights the effect of an inductee's altruism on referral reward programs (RRPs) on an online shopping guide platform to determine the optimal RRP and referral reward allocation under a Cashback and Referral RRP.
Design/methodology/approach
The authors consider a Stackelberg game with a platform, seller, inductor and inductee, where the inductee's altruism plays a vital role in determining the optimal RRP in equilibrium.
Findings
The authors show that the conditions under which it is optimal to reward the inductor only or reward both inductor and inductee are equal or unequal depending on the degree of the inductee's altruism. Suppose the platform is unable to dynamically decide the commission fee. In that case, the platform may not always be involved in RRPs and will gradually reduce the rewards for inductees as the altruism increases.
Research limitations/implications
This study focuses on a free-to-consumers model where sellers pay membership fees. Thus, this study has limitations regarding other pricing schemes such as a model in which consumers pay a fee while sellers do not or a model in which both types of users pay fees.
Practical implications
This analytical work can help platforms optimize referral reward strategies and referral reward allocation considering the influence of an inductee's altruism.
Originality/value
In a Cashback and Referral RRP on a shopping guide platform, the authors provide applicable conditions for the platform to involve in the RRPs when rewarding an equal bonus for the inductor and inductee first. Further, the authors show the optimal referral reward strategy and referral reward allocation when giving the different bonuses to the inductor and inductee.
Keywords
Acknowledgements
This work is supported by the National Natural Science Foundation of China [grant numbers 72071040, 71671036] and the Major Project of Philosophy and Social Science Research in Colleges and Universities in Jiangsu Province [grant number 2018SJZDA005].
Authorship contribution statement: Xiaojing Zhang: Conceptualization, Methodology, Visualization, Investigation, Supervision. Yulin Zhang: Software, Data curation, Writing – original draft, Validation, Writing – review and editing.
Citation
Zhang, X. and Zhang, Y. (2022), "Reward the inductor or inductee? The effect of the inductee's altruism on a shopping guide platform", Asia Pacific Journal of Marketing and Logistics, Vol. 34 No. 9, pp. 1976-2006. https://doi.org/10.1108/APJML-06-2021-0421
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited