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Dynamic pricing and coupon promotion strategies in a dual-channel supply chain based on differential game

Zonghuo Li (Soochow University, Suzhou, China) (Nanjing University of Science and Technology, Nanjing, China)
Wensheng Yang (Nanjing University of Science and Technology, Nanjing, China)
Yinyuan Si (Nanjing University of Science and Technology, Nanjing, China)

Kybernetes

ISSN: 0368-492X

Article publication date: 10 August 2021

Issue publication date: 29 November 2022

290

Abstract

Purpose

This paper investigates a dual-channel supply chain in which a manufacturer offers coupons in the online channel and the retailer in the offline channel. The optimal pricing and coupon promotion policies are explored, and the brand image under different promotion scenarios is studied.

Design/methodology/approach

Three differential game models, namely no coupon is offered, coupons offered by the manufacturer and coupons offered by the retailer, are constructed.

Findings

The results show that the manufacturer and retailer intend to conduct coupon promotions under a large coupon redemption rate. Coupon promotion derives a higher price and profit for the issuers, and the manufacturer can free-ride on the retailer's coupon promotion. The retailer's profit in the retailer-promotion scenario may be lower than that in the manufacturer-promotion scenario in some special conditions. Besides, price, coupon face value, brand image and profit increase over time. After multiple cycles game, the operational strategy evolves to an optimal equilibrium status.

Originality/value

This paper provides guidance and advice for dual-channel supply enterprises to implement joint pricing and coupon promotion strategies under multiple sales seasons.

Keywords

Acknowledgements

This research was supported by the National Natural Science Foundation of China under Projects 71771122 and 71562006.

Conflict of interest: All authors declare that they have no conflict of interests.

Citation

Li, Z., Yang, W. and Si, Y. (2022), "Dynamic pricing and coupon promotion strategies in a dual-channel supply chain based on differential game", Kybernetes, Vol. 51 No. 11, pp. 3201-3235. https://doi.org/10.1108/K-02-2021-0160

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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