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Vol. 39, No. 3, 2025

Channel Strategy, Greenness Degree and Pricing Decisions of the ——陈克兵等: 基于消费者产品偏好的制造商渠道选择和绿色度水平与定价决策Manufacturer Based on Customer′s Product Preference

Title

Channel Strategy, Greenness Degree and Pricing Decisions of the ——陈克兵等: 基于消费者产品偏好的制造商渠道选择和绿色度水平与定价决策Manufacturer Based on Customer′s Product Preference

Author

CHEN Kebing; WANG Yuqi; XIAO Di

Abstract

The rapid development of economy, society and cities has led to widespread environmental pollution and a shortage of natural resources. This has brought green environmental protection to the forefront of global attention. As the issue of green development gains extensive recognition from all parties, the focus of business management has shifted towards how to effectively implement green supply chain cooperation. Motivated by these pressing concerns, this article studies the pricing of green product, product greenness, cooperation strategies of green production input cost, and channel selection. The study explores the impact of green product input and cost-sharing strategy on members′ decision-making and channel strategy with this research framework. The research adopts consumer utility theory and game theory to derive the supply chain members′ optimal decisions (e.g., pricing, order quantity, and green manufacturing input). It also takes into account consumers′ product preferences, such as the willingness to accept direct channel products and the preference for environmentally friendly products. We explore whether the green manufacturer should use a dual-channel strategy by complementing the retail channel with a direct sales channel. The following four critical issues are discussed in this paper: 1) How does the manufacturer select channel strategy under three supply chain management modes (i.e., supply chain cooperative mode, partial cooperative mode, and non-cooperative mode)? 2) How do consumer preference (greenness preference and acceptance of direct selling products), green technology development cost, and customer channel preference influence the optimal supply chain decisions and profits under different cooperation modes? 3) What is the impact of the green cost-sharing strategy on the channel selection and decision-making of manufacturers, and what are the changes in environmental and economic benefits after the implementation of the strategy? 4) Considering different manufacturer′s channel strategies (dual-channel, direct channel, and retail channel) and differing customer acceptance of direct products, how do different supply chain cooperation models affect manufacturers′ channel selection strategies?This paper examines the optimal decision-makings and profits for supply chain members under different manufacturer channel strategies. Through the analysis of optimal decisions and profits, we obtain the manufacturer′s channel selection strategy under various circumstances. The main insights obtained from this article are as follows.In the first part, the channel selection under full cooperation model is discussed. When the consumer′s acceptance of direct channel products is small enough, the direct channel cannot bring more profit to the manufacturer, so the manufacturer will give up the direct channel and only sell the products through retail channel. When consumers have a moderate acceptance of direct channel products, the manufacturer can make profits from direct channels, and the profits obtained from direct channels are greater than the lost by the retail channel. Therefore, the manufacturer will open the dual channels. However, when consumers have a high acceptance of direct channel products, the manufacturers only sell products through the direct channel, and consumers will choose to buy products from direct channels, resulting in no demand from the retail channel. In this case, the overall profit obtained by direct channel sales is greater than the overall profit of dual-channel sales. Therefore, the channel strategy of only opening one direct channel to sell green products is more beneficial to the supply chain. In the second part, the manufacturer′s channel selection under non-cooperative or partial cooperative modes is investigated. Although the opening of direct channels does not generate demand, it poses a threat to the sales of retailers in the retail channel, which leads the retailer to voluntarily reduce the market retail price, thereby ensuring that the sales volume does not decrease. It is also different from the full cooperation model: in the non-cooperation model, the manufacturer will not abandon the retail channel and choose the direct channel. Moreover, in the cooperation or non-cooperation mode for the green input cost, the manufacturer′s introduction of a direct channel serves primarily as a showroom without generating substantial demand. However, direct channel pricing push the retail channel to reduce its retail price, thus boosting the overall market demand and eventually achieving the goal of profit growth.In the third part, the green cost sharing contract employed by the supply chain members is designed. When implementing the green cost sharing contract, the manufacturer will increase the likelihood of the dual-channel strategy. Green cost-sharing contract can effectively improve the greenness of products and the profit of the manufacturer. However, when the green cost shared by the retailer is too large in the retail channel strategy, the profit of the retailer will decrease, while in the dual-channel strategy, the profit of the retailer is always smaller than that in the non-cooperative mode. We show that an appropriate sharing ratio can effectively improve the environmental and economic benefit of the supply chain. In addition, the contract may not be implemented in the dual channel strategy because the retailer is unprofitable.In summary, in the context of meeting government requirements and consumers′ growing demand for green products, manufacturers should take environmental responsibility and transform their products into green ones. Meanwhile, managers are required to make scientific decisions based on the differences in green product production and consumer channel acceptance in their supply chain management, so as to ultimately enhance the overall competitiveness of the green supply chains. This research has the significant theoretical importance and practical significance.

Keywords

Supply chain management; Channel strategy; Pricing; Green input; Showrooming

Issue

Vol. 39, No. 3, 2025

References