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- Authors:
- Yuxin Chen NYU Shanghai, Shanghai 200122, China;
- Yue Dai School of Management, Fudan University, Shanghai 200433, China;
School of Management, Fudan University, Shanghai 200433, China;
https://orcid.org/0000-0001-5964-6509
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- Zhe Zhang School of Management, Fudan University, Shanghai 200433, China;
School of Management, Fudan University, Shanghai 200433, China;
https://orcid.org/0000-0002-9531-789X
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- Kun Zhang School of Economics & Management, Nanjing University of Science and Technology, Nanjing 210094, China
School of Economics & Management, Nanjing University of Science and Technology, Nanjing 210094, China
https://orcid.org/0000-0003-3945-0175
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Management ScienceVolume 70Issue 5May 2024pp 3102–3122https://doi.org/10.1287/mnsc.2023.4849
Published:03 July 2023Publication History
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Management Science
Volume 70, Issue 5
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Abstract
Retailers managing both online and offline channels have to decide whether to adopt the uniform (i.e., charging the same price online and offline) or dual (i.e., charging different prices online and offline) pricing strategy. This decision is made even more challenging as consumers are increasingly multirooming as they may search offline and then purchase online (showrooming) or the other way around (webrooming). In this paper, we develop an analytical model to examine such a decision. The model takes into consideration (1) consumers’ uncertainty about digital and nondigital product attributes, (2) consumers’ costs of showrooming as well as webrooming, and (3) the prevalence of costly product return. We show that uniform pricing can be optimal for a monopoly retailer even though consumers have different costs for shopping online versus offline and there is no intrinsic disutility against price discrimination by consumers. In addition, when the uniform price is optimal, it can be lower than both the offline and online prices under optimal dual pricing. This is because, compared with dual pricing, uniform pricing eliminates consumers’ uncertainty about the offline store’s price so that they are more likely to search the nondigital attribute at the offline store and buy the fitted product. Moreover, a relatively higher online price has to be used under dual pricing to encourage consumers to search offline for the purpose of reducing the product return costs.
This paper was accepted by Dmitri Kuksov, marketing.
Funding: This work was supported by the National Natural Science Foundation of China [Grants 71922008, 71972043, 72025102, and 72091211] and the Sci-Tech Innovation Foundation of School of Management at Fudan University [Grant 20210202].
Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.4849.
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Published in
Management Science Volume 70, Issue 5
May 2024
682 pages
ISSN:0025-1909
DOI:10.1287/mnsc.2024.70.issue-5
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Publication History
- Published: 3 July 2023
- Accepted: 17 April 2023
- Received: 4 September 2020
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- multichannel
- multirooming
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