| Title | Dual-channel cause marketing decisions considering both consumer heterogeneity and consumer trust in online shopping |
| Author | WU Chuanliang; TIAN Zhongjun; CHEN Jing |
| Abstract | With the rapid development of e-commerce, manufacturers have extended their sales channels from offline to online, forming a dual-channel distribution structure where physical distributors and manufacturer network sales coexist. However, sales of products through online channels lack physical presence and interactivity, resulting in lower levels of consumer trust compared to physical distribution channels. In practice, one way to increase consumer trust in online shopping is to implement cause marketing (CM), which not only improves social welfare but also increases firm profitability. The successful implementation of CM depends on the warm glow effect generated by prosocial consumers in heterogeneous consumers (prosocial and non-prosocial consumers), which affects the pricing decision. Online channels can change the size of the warm glow effect by deciding the amount of donation. This paper mainly studies how to make reasonable pricing and donation decisions in a dual-channel supply chain considering both consumer heterogeneity and consumer trust in online shopping.To address the above issues, we take a dual-channel supply chain composed of a manufacturer and a physical distributor as the research object. We focus on the impact of consumer heterogeneity and consumer trust in online shopping on the dual-channel supply chain′s CM decisions when the manufacturer implements CM in the online channel, taking advantage of game theory and consumer utility theory. At the same time, we comparatively analyze different results of CM decisions in the dual-channel supply chain and provide some management insights based on numerical analysis.The specific research process of the paper is summarized as follows. First, we take the no-CM case as the basic model and give the equilibrium solution of relevant parameters for comparison and analysis in subsequent sections. Then, through an analysis of the demand functions of consumers with different attributes in the dual-channel, we provide segmented demand functions for each channel. Based on the different demand functions, we derive two scenarios of CM decisions in the dual-channel model and give pricing and donation results for each scenario. Next, by comparing the results of the two scenarios of CM decisions and analyzing the profits of the manufacturer and the physical distributor, we conclude the manufacturer-led CM strategic decisions in the dual-channel supply chain. Finally, we conduct numerical analysis to verify and analyze the impact of CM preference, proportion of prosocial consumers, and consumer trust in online shopping on the CM decisions.The specific findings of the paper are summarized as follows: 1) The implementation of CM by the manufacturer in the online channel intensifies competition between channels. When the warm glow effect is strong, the manufacturer can adopt a high-price strategy and only serve prosocial consumers, as the marginal benefit generated by the high price compensates for the loss of abandoning non-prosocial consumers to the physical distribution channel. When the warm glow effect is weak, the manufacturer should serve both types of consumers in the online channel, as both of the manufacturer′s profit and the social welfare increase compared to the no-CM case. 2) While the unit donation amount depends on not only the proportion of prosocial consumers but also the degree of the CM preference when the warm glow effect is weak, it depends on the latter only when the warm glow effect is strong. 3) While the total donation amount monotonically increases in the strength of the warm glow effect, it decreases and then increases with the increase of consumer trust in online shopping. We also provide some management insights: 1) When implementing the CM strategy, the manufacturer shall increase the retail price of the online channel, but the price of the physical distribution channel shall be reduced if the warm glow effect is weak. 2) When the warm glow effect is strong, the manufacturer will donate more funds to non-profit organizations even if consumer trust in online shopping is low. Thus, non-profit organizations shall offer CM projects with stronger warm glow effect to the manufacturer so that more benefit can be generated by the CM strategy. 3) The manufacturer prefers to products with low consumer trust in online shopping when implementing the CM strategy, while the high-price strategy shall be adopted no matter whether consumer trust in online shopping is high or low. 4) The government shall encourage firms to implement the CM strategy in order to increase social welfare when consumes′ CM preference, proportion of prosocial consumers, and consumer trust in online shopping fall in certain threshold. |
| Keywords | Cause marketing; Consumer heterogeneity; Trust; Dual-channel; Warm glow effect |
| Issue | Vol. 39, No. 2, 2025 |
Title
Dual-channel cause marketing decisions considering both consumer heterogeneity and consumer trust in online shopping
Author
WU Chuanliang; TIAN Zhongjun; CHEN Jing
Abstract
With the rapid development of e-commerce, manufacturers have extended their sales channels from offline to online, forming a dual-channel distribution structure where physical distributors and manufacturer network sales coexist. However, sales of products through online channels lack physical presence and interactivity, resulting in lower levels of consumer trust compared to physical distribution channels. In practice, one way to increase consumer trust in online shopping is to implement cause marketing (CM), which not only improves social welfare but also increases firm profitability. The successful implementation of CM depends on the warm glow effect generated by prosocial consumers in heterogeneous consumers (prosocial and non-prosocial consumers), which affects the pricing decision. Online channels can change the size of the warm glow effect by deciding the amount of donation. This paper mainly studies how to make reasonable pricing and donation decisions in a dual-channel supply chain considering both consumer heterogeneity and consumer trust in online shopping.To address the above issues, we take a dual-channel supply chain composed of a manufacturer and a physical distributor as the research object. We focus on the impact of consumer heterogeneity and consumer trust in online shopping on the dual-channel supply chain′s CM decisions when the manufacturer implements CM in the online channel, taking advantage of game theory and consumer utility theory. At the same time, we comparatively analyze different results of CM decisions in the dual-channel supply chain and provide some management insights based on numerical analysis.The specific research process of the paper is summarized as follows. First, we take the no-CM case as the basic model and give the equilibrium solution of relevant parameters for comparison and analysis in subsequent sections. Then, through an analysis of the demand functions of consumers with different attributes in the dual-channel, we provide segmented demand functions for each channel. Based on the different demand functions, we derive two scenarios of CM decisions in the dual-channel model and give pricing and donation results for each scenario. Next, by comparing the results of the two scenarios of CM decisions and analyzing the profits of the manufacturer and the physical distributor, we conclude the manufacturer-led CM strategic decisions in the dual-channel supply chain. Finally, we conduct numerical analysis to verify and analyze the impact of CM preference, proportion of prosocial consumers, and consumer trust in online shopping on the CM decisions.The specific findings of the paper are summarized as follows: 1) The implementation of CM by the manufacturer in the online channel intensifies competition between channels. When the warm glow effect is strong, the manufacturer can adopt a high-price strategy and only serve prosocial consumers, as the marginal benefit generated by the high price compensates for the loss of abandoning non-prosocial consumers to the physical distribution channel. When the warm glow effect is weak, the manufacturer should serve both types of consumers in the online channel, as both of the manufacturer′s profit and the social welfare increase compared to the no-CM case. 2) While the unit donation amount depends on not only the proportion of prosocial consumers but also the degree of the CM preference when the warm glow effect is weak, it depends on the latter only when the warm glow effect is strong. 3) While the total donation amount monotonically increases in the strength of the warm glow effect, it decreases and then increases with the increase of consumer trust in online shopping. We also provide some management insights: 1) When implementing the CM strategy, the manufacturer shall increase the retail price of the online channel, but the price of the physical distribution channel shall be reduced if the warm glow effect is weak. 2) When the warm glow effect is strong, the manufacturer will donate more funds to non-profit organizations even if consumer trust in online shopping is low. Thus, non-profit organizations shall offer CM projects with stronger warm glow effect to the manufacturer so that more benefit can be generated by the CM strategy. 3) The manufacturer prefers to products with low consumer trust in online shopping when implementing the CM strategy, while the high-price strategy shall be adopted no matter whether consumer trust in online shopping is high or low. 4) The government shall encourage firms to implement the CM strategy in order to increase social welfare when consumes′ CM preference, proportion of prosocial consumers, and consumer trust in online shopping fall in certain threshold.
Keywords
Cause marketing; Consumer heterogeneity; Trust; Dual-channel; Warm glow effect
Issue
Vol. 39, No. 2, 2025
References