Pricing Game Models of Hybrid Channel Supply Chain: A Strategic Consumer Behavior Perspective
Round 1
Reviewer 1 Report
Using game theory and consumer utility theory, the authors develop a retailer-driven pricing model to study the optimal pricing problem for each channel in a mixed-channel supply chain, taking into account the characteristics of channel competition and the waiting behavior of strategic consumers. Authors shows a negative relationship between the proportion of strategic consumers and the optimal pricing and profit of each channel, with the optimal pricing and profit of both manufacturers and retailers trending downward as the proportion of strategic consumers rises. Overall the research in this paper is very interesting, however there are several issues that need further improvement：
(1) The introduction section should be reorganized according to the background of the study, the necessary for the study, the current status of existing research, the shortcomings of existing research, and the innovation points of the study.
(2) A table comparing the differences and connections between existing studies and this study should be added to the literature review section.
(3) A decision sequence diagram should be added.
(4) Label 1 should clearly show which are the decision variables.
(5) All formulas should use the formula editor.
(6) The authors' -consumer utility function has no reference source.
(7) Hessian matrix of formula (12) should make it clear that the first-section sequential principal subformula is less than 0 and the second-order sequential principal subformula is greater than 0.
(8) When the authors performed the simulation, the simulation parameters did not specify the source.
(9) The authors should briefly describe in the conclusion what methods were used to study what questions and what conclusions were reached in this paper.
(10) The management revelation section is very weakly written and hopefully can be rewritten.
Author Response
Thank you for your valuable suggestions. The modifications of this paper are as follows:
(1) The introduction section should be reorganized according to the background of the study, the necessary for the study, the current status of existing research, the shortcomings of existing research, and the innovation points of the study.
In the introduction section of the article, it is also based on the research background and issues, research necessity, research status, shortcomings of existing research, and innovation points, without any adjustments.
(2)A table comparing the differences and connections between existing studies and this study should be added to the literature review section.
This comparative table has been organized, but it has not yet been included in the main text, as it is also a repetition of the literature review. If the review experts deem it necessary to include it, I will add it in the subsequent revisions.
|
Dimension |
Researcher |
Main Point |
|
hybrid channel supply chain |
Liu et al [6] Li et al [7] |
The mixed channel of retailers and suppliers complicates the relationship between manufacturers and retailers. Moderate channel conflict improves the competitiveness of retailers and manufacturers, while excessive channel conflict can cause consumers to lose interest in shopping. |
|
consumer behavior perspective |
Sha et al[8], Cai et al[9] Liao et al[10], Chen et al [11] Zhang et al [12], Li et al[13] Hassan et al [14], Pi et al [15] Lei et al [16], Wang et al [17], Yang et al [18], Haiyun et al[19] Yuan et al [20], Liu et al[21] Sun et al [22], Wang et al[23] Lei et al[24] |
Consumers' channel preferences and product pricing strategies will influence their final decisions. Service quality, green preferences, consumer reviews, consumer network acceptability, and patience all influence multi-channel pricing. Consumer behavior can have a significant impact on the supply chain and on overall profitability. Consumer behavior should be a key consideration for channel managers when making pricing decisions. |
|
战略消费者视角 |
Nosoohi, I[25] Li et al[26] |
Due to the influence of the Internet, consumers can use the Internet information to maximize their own interests. This behavior seriously damages the interests of the members of the supply chain and poses new challenges to the preferential policies of the platform |
|
Fan et al[27] |
The influence of the learning behavior of strategic consumers on the dynamic pricing and inventory mechanisms of retailers is studied |
|
|
Zhou et al[28] |
The profit when strategic consumer behavior is higher than that when ignoring strategic consumer |
|
|
Zhao et al[29] |
The impact of strategic consumer ratio on optimal retailer pricing in two environmental periods. |
|
|
Heydari, J [30] Zhang et al[31] Khouja, M[32] |
Sellers must lower consumer expectations during the promotion period, and purchase restrictions and pre-sales are the most commonly used means |
|
|
Chen et al[33] |
Pre-sale strategies can help sellers collect strategic consumer information in advance to adjust future arrangements and reduce the impact of future strategic behaviors. |
|
|
Li et al[34] |
Using the two-cycle model, we study the influence of the strategic consumers on the platform discount pricing strategy and the inhibitory effect of the purchase restriction policy on the consumer strategic behavior. |
|
|
Li et al[35] |
The impact of pre-announced pricing strategies on supply chain pricing is studied |
(3) All formulas should use the formula editor.
All the formula symbols are modified by the formula editor
(4)A decision sequence diagram should be added.
The decision sequence diagram is shown in Figure 1 of the article
(5) Tabel 1 should clearly show which are the decision variables.
In Tabel 1, w,p and are the decision variables.
(6)The authors' -consumer utility function has no reference source.
I don't know which is effect function the evaluation you mentioned.
\(7)Hessian matrix of formula (12) should make it clear that the first-section sequential principal subformula is less than 0 and the second-order sequential principal subformula is greater than 0.
Added in the main text, please check
(8)When the authors performed the simulation, the simulation parameters did not specify the source.
The simulation was conducted using numerical examples, without the source of parameter settings.
(9)The authors should briefly describe in the conclusion what methods were used to study what questions and what conclusions were reached in this paper.
The methods, models and conclusion in the article has been explained.
This paper constructs a retailer-led mixed channel supply chain pricing model based on the heterogeneous behavior of consumers and discusses the impact of purchase restriction, the proportion of strategic consumers, and the early release of discount information on supply chain pricing and profit in light of the coexistence of strategic consumers and short-sighted consumers in the market. Simulation and comparative analysis have led to the following conclusions
(10)The management revelation section is very weakly written and hopefully can be rewritten.
The article is only an analysis of the research conclusion, and the management inspiration in the title has been removed.
Author Response File: 
Author Response.pdf
Reviewer 2 Report
The Model (Section 3)
- The justification of the assumption and limitation of the model are not stated.
- The author set the retailer as the stackelberg leader. Can you justify the condition the retailer is the leader in the supply chain system, despite the manufacturer as upstream stakeholders.
- I think the authors make a mistake by stating two section (Section 3 and 4) as the model section. Please revise whether the 3rd or the 4th section title!
- Based on Equation 7, 8 and 9, I find that the demand of this model is not deterministic. Please state the probability distribution of the model.
The Model (Section 4):
- I have difficulties to find nondiscounted and discounted price of the online manufacturer, online retailer and offline retailer to face the strategic and nonstrategic customer. Can the author show the optimal pricing decision different among the channel (offline retailer, online retailer, andonline manufacturer) and the different strategies to face strategic and nonstrategic customer? You can try by proofing the price in T1 stage will be higher than T2 stage. It should be the price of retailers must be lower than the manufacturer since the retailer acted as the stackelberg.
- Figure 12 shows the rising profit then falls in h=0.8. Why the profit achieve highest point in h=0.8 and what is the implication in the real-world problem ?
Overall, I find the paper is quite amusing. However, there are some ambiguity raises from the paper concept. In omnichannel supply chain studies, the important topic that the manager needs to tackle is the customer switching behavior among the channel because of channel price difference. This paper already accommodate this issue in interchannel switching. They also utilize a strategic customer behavior, where customer will wait for the discounted period. I still do not understand enough about the statement of the author about waiting for discounted period. The author needs to make a deeper discussion of how the strategic customer may move in the hybrid channel supply chain. The author also needs to differenciate between the strategic and nonstrategic customer. As I know, if the customer is waiting for the discounted period, the author also needs to utilize customer time switching behavior considering the amount of discount.
-
Author Response
Thank you for your valuable suggestions. The modifications of this paper are as follows:
The Model (Section 3)
- The justification of the assumption and limitation of the model are not stated.
The reason for the first hypothesis: In order to make the model more general, manufacturers and retailers sell homogeneous products.
The reason for the second hypothesis: In order to maintain the universality of the model, it is assumed that the profit of each channel is positive; otherwise, the products will not be sold through this channel. And the goods are sold separately, so there are no bundled sales, and consumers will not make repeated purchases. Both manufacturers and retailers are risk-neutral, and they have no obvious preference for risks.
The reason for the third hypothesis: All retailers' parameters are symmetrical; Although this limitation does not meet the actual situation, it is still possible to obtain representative conclusions with certain reference value through analysis.
- The author set the retailer as the stackelberg leader. Can you justify the condition the retailer is the leader in the supply chain system, despite the manufacturer as upstream stakeholders.
The article mistakenly deleted a hypothesis during editing, which is as follows and has been added to the original text.
(2) There are dominant enterprises in the supply chain, and the traditional sales model is that manufacturers control the sales of products and control the sales channels and prices of products. However, some large retailers gradually occupy the dominant position in the supply chain due to their unique advantage of being close to end consumers. Considering this fact, this article uses a retailer led model for modeling and analysis.
- I think the authors make a mistake by stating two section (Section 3 and 4) as the model section. Please revise whether the 3rd or the 4th section title!
This error is very serious and we did not take it seriously during the inspection. Thank you very much.
Section 3: Model Description
Section 4: Model Establishment and Solution
- Based on Equation 7, 8 and 9, I find that the demand of this model is not deterministic. Please state the probability distribution of the model.
This question has been explained in the text, please check it.
In order to facilitate the study, it is assumed that there is no shortage of goods during the normal period. During the discount period, merchants employ restrictive strategies to curb the waiting behavior of strategic consumers, and the probability of successful purchase of goods by consumers during the discount period is h. Taking into account the heterogeneity and dynamics of consumers' valuation, it is represented by the probability density function , assuming v is between and follows a uniform distribution, represents the maximum valuation, and consumers will not purchase goods whose price exceeds the maximum valuation.
The Model (Section 4):
- I have difficulties to find nondiscounted and discounted price of the online manufacturer, online retailer and offline retailer to face the strategic and nonstrategic customer. Can the author show the optimal pricing decision different among the channel (offline retailer, online retailer, andonline manufacturer) and the different strategies to face strategic and nonstrategic customer? You can try by proofing the price in T1 stage will be higher than T2 stage. It should be the price of retailers must be lower than the manufacturer since the retailer acted as the stackelberg.
In T1 stage, the optimal price of manufacturers is:
The optimal price of two channels is:
In T2 stage, the optimal price of manufacturers is:
The optimal price of two channels is:
For the strategic and nonstrategic customer, we analyze the effect decision table based on Table 2.
Table 2. Consumer utility decision table
|
Type |
Purchase stage |
Ranges |
|
Short-sighted consumer |
||
|
Strategic consumer |
|
|
The price in T1 stage will be higher than T2 stage, because there are many conditions and variables involved, the formula for proving this conclusion under these conditions will be lengthy and complex, so it was not proven in the main text.
- Figure 12 shows the rising profit then falls in h=0.8. Why the profit achieve highest point in h=0.8 and what is the implication in the real-world problem ?
In Figure 12 shows a downward trend as the value of h increases and the retailers' dual channel profits first increase and then decrease because the profit of manufacturers' direct sales channels is negatively correlated with h.
However, in general, the value of h cannot be completely inclined towards a single channel. Consumers will always compare and make choices from multiple channels. In practical terms, it is also in line with the Pareto optimality (80/20) principle and its impact on retailer profits (or revenue), which means that under these conditions, h will show a downward trend around 0.8.
Overall, I find the paper is quite amusing. However, there are some ambiguity raises from the paper concept. In omnichannel supply chain studies, the important topic that the manager needs to tackle is the customer switching behavior among the channel because of channel price difference. This paper already accommodate this issue in interchannel switching. They also utilize a strategic customer behavior, where customer will wait for the discounted period. I still do not understand enough about the statement of the author about waiting for discounted period. The author needs to make a deeper discussion of how the strategic customer may move in the hybrid channel supply chain. The author also needs to differenciate between the strategic and nonstrategic customer. As I know, if the customer is waiting for the discounted period, the author also needs to utilize customer time switching behavior considering the amount of discount.
Specially, thanks to the reviewer for your recognition of this article. From the topic selection, conception, literature review and comparison, writing, graphing, formula editing, model description, model establishment and solution, result analysis, and all other processes, all of which reflect the author's arduous sweat at every step. We will continue to uphold our research attitude and focus on in-depth research in the field of supply chain pricing decision-making, hoping for better research results.
Thank you again for your hard criticism and correction of the article.
Wishing you success in your work and good health!
Author Response File: Author Response.pdf
Reviewer 3 Report
The manuscript discusses a significant subject, particularly in the wake of the covid outbreak. I greatly appreciate the authors' commendable efforts, as I found immense interest in perusing through the document. The abstract is skillfully crafted, effectively emphasizing the research question, analysis methods , and findings. The introductory part is presented adeptly, furnishing the necessary backdrop for the study. The methodological approach is robust, and the model's outcomes are suitably showcased. I would like to extend my congratulations for the remarkable endeavor.
Author Response
Thanks a lot!
Reviewer 4 Report
Please see the attached. Thank you!
Comments for author File: Comments.pdf
Please see the attached. Thank you!
Author Response
Thank you for your valuable suggestions. The modifications of this paper are as follows:
Summary
This manuscript proposes a model to investigate the effect of strategic consumers on multi-channel supply chain optimal decisions. By considering two groups of customers (strategic and short-sighted) and multi sales channels (manufacturer direct, offline retailer and online retailer), authors identified the two-stage optimal pricing for each channel with the presence of strategic consumers and offered numerical examples to illustrate their key findings. I find the research topic and methodology suitable to JTAER. However, there are several issues in the current version. I sincerely hope that my comments would be useful for the authors to improve their manuscript.
Thank you for your hard criticism and correction of the article in order to improve our manuscript.
Concerns
- Better justify model setup
- The proposed retailer-led supply chain requires clearer justification. Authors should provide more realistic examples and clarify the application environment of the retailer-led chains. What happens if it’s a manufacturer led supply chain? How will it affect optimal decisions? It will be another interesting question and direction to be explored.
If we consider a manufacturer-led supply chain as an alternative, it would significantly affect the optimal decisions and dynamics of the supply chain. In a manufacturer-led supply chain, the manufacturer takes the lead in coordinating and managing the various activities involved in the supply chain, such as production, distribution, and inventory management.
The shift to a manufacturer-led supply chain would result in a different distribution of responsibilities, decision-making authority, and control over the supply chain processes. The manufacturer would have more control over production planning, inventory management, and logistics decisions. They would determine the production quantities, set pricing strategies, and manage the distribution network.
Compared to a retailer-led supply chain, a manufacturer-led supply chain may have certain advantages. For instance, the manufacturer can have better visibility into the demand patterns and overall market dynamics, allowing for more accurate forecasting and production planning. They can also exercise more control over quality assurance and product customization, leading to potentially higher customer satisfaction.
However, there are also challenges associated with a manufacturer-led supply chain. The manufacturer may face difficulties in accurately gauging the end customers' demand due to the increased number of intermediaries involved. It may also result in longer lead times and higher inventory levels at the manufacturer's end, as they need to anticipate the demand from multiple retailers or distributors.
Exploring the implications of a manufacturer-led supply chain would indeed be an interesting question and direction for further research. It would involve studying the decision-making dynamics, coordination mechanisms, and performance outcomes in such a supply chain configuration. Comparing and contrasting the retailer-led and manufacturer-led supply chains can provide valuable insights into the optimal design and management of supply chains in different contexts.
- The two-stage setting seems problematic. Because one sales cycle includes one normal period and one discount period. In the consumer utility analysis, authors claim that “if this sales cycle does not meet their utility requirements, they enter the subsequent sales cycle and resume the above steps. ” I also found an assumption that “the discount period is long and frequent”. It seems the paper considers multi sales cycles. However, what is the consumer arrival rate like? I didn’t see how to deal with the pent-up demand in the model. From the proposed model it seems to focus on single sales cycle, which is confusing.
The hybrid supply chain structure studied in this article consists of manufacturers and hybrid channel retailers; Retailers are the leaders of the Stackelberg game, while manufacturers are the followers; Manufacturers and retailers are set to simultaneously sell a product in the market, which is durable goods. Market consumers are divided into strategic and short-sighted types and both appear in the market during the first period. The product sales cycle is divided into two stages: the normal sales period and the discount period. The two stages are cyclical and are sold through three channels during both cycles.
- Is wholesale price exogenous? In a retailer-led supply chain, can wholesale prices be decision variables as well?
The wholesale price is an endogenous variable and a decision variable in the hybrid channel supply chain pricing model. In the hybrid channel supply chain dominated by retailers, the wholesale price of retailers is also a decision variable.
- h is the probability of getting a product in discount period. How do consumers get to know this information? I can see that consumer may view the amount of inventory on hand for online channel. How do they know for offline/manufacturer’s channel? In different channel, why do they have the same h?
In the T2 purchase restriction stage, h is the probability that consumers will obtain the product
Considering that the difference in cost and market position between retailers in a competitive market may be much smaller than that between suppliers and retailers, and for the convenience of calculation, it is assumed that all retailers' parameters are symmetrical; Although this limitation does not meet the actual situation, it is still possible to obtain representative conclusions with certain reference value through analysis. Therefore, h is the same in different channel.
- The model description is confusing and hard-to-read.
- I appreciate the notation table, however the model development should tell a story to help readers to better understand your model. Due to lacking in the illustration of important parameters in the body, I have to go back to the table look up the meaning, which is annoying. The author should comb the logic of model and improve the presentation of model part.
3.2. Symbol Description
Description of various symbols used in the model is shown in Table 1:
Table 1. Model symbol description and meaning
|
Symbol |
Symbol description and its interpretation |
|
Potential market demand |
|
|
Manufacturer online preference, retail online channel preference, , |
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The proportion of strategic consumers corresponding to the channel, the subscripts 1, 2, 3 represent direct sales, online, and offline channels, respectively |
|
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represents the price sensitivity coefficient, represents the cross-price elasticity between channels |
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Subscript, 1, 2 respectively indicate the manufacturer’s direct sales channels, online retail, and offline retail |
|
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indicates the normal sales period,indicates the discount period |
|
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is the manufacturer's production cost; represents the sales cost of different channels, generally default |
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is the wholesale price in the online retail channel, and is the wholesale price in the offline retail channe. |
|
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is the manufacturer’s direct selling price in online channels, is the retail channel online selling prices, and is the retail channels offline selling price. |
|
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utility of commodity |
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The range of , which is the probability of consumers obtaining goods when the purchase restriction is implemented |
|
|
Consumer utility |
|
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, and are direct sales channel demand, retailer online demand, offline demand |
|
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is the manufacturer’s profit, is the retailer’s profit, is the overall supply chain profit. |
3.3 Establishment of the basic Decision model
In Table 1, the corrections have been made to the symbols and their explanations. Especially the subscript and superscript of symbols have been corrected.
- The equation (1)(2)(3) appear suddenly. The author should explain what they are. What is Dm? I only found D1 and D2. Is Dm also affected by b and r.
This article refers to Heydari et al., [30] Zhang et al. [31] and Khouja et al. [32] to construct the linear demand function of each channel, in which and represent the price sensitivity coefficients of manufacturers' direct sales and retailers' online and offline, , and are the cross-price elasticity between the two channels, and .
（1）
（2）
（3）
Therefore, equation (1)(2)(3) have been already corrected.
, and are direct sales channel demand, retailer online demand and offline demand.
- In equation 13, why is PT2? I think this subsection only focuses on T1 stage.
The equation 13 has been corrected. The modified formula is as follows:
- I found the numerical analysis of pre-announced discount is interesting. I think the analytical solutions may be obtained and s could be treated as a decision variable. This could be an interesting model extension.
Thanks a lot for your guidance on our research in our article.
- The results and implications obtained in this study seem too intuitive. The paper lacks significant contributions.
In our research, we proposed important results and implications through model deduction and numerical simulation methods. The important research conclusions are as follows.
Heterogeneous consumer behavior and utility theory impact consumer purchasing opportunities. Considering the pre-announced discount, the greater the difference between the two phases of pricing, the more strategic consumers tend to wait until the discount period to make a purchase, and the resulting intertemporal effect intensifies channel competition. However, this competition decreases the profit margin of businesses and supply chains and increases the surplus of consumers, which is not advantageous for all channel merchants and the entire supply chain.
It is now indisputable that consumers pay close attention to historical discount information and potential future commodity prices. According to research, the proportion of strategic consumers is constant, and consumers refer to past or forthcoming reductions that have been announced. There is a minimum purchase restriction coefficient value. If the purchase limit coefficient is less than or equal to this value, it is positively correlated with the overall profit of the retailer and the supply chain, and if it exceeds this value, it is negatively correlated. Therefore, a suitable purchase restriction strategy contributes to increased profits for retailers and the supply chain.
Considering the history and pre-announced discount information, there exists a Pareto region for the combination of the ratio purchase restriction factors of strategic consumers. Reasonable combinations within this region can result in higher profits for retailers and manufacturers.
The important contributions of our research are as follows:
- Regarding the current mixed channel sales model, we study the impact of strategic consumers on channel pricing.
- Construct a periodic utility model for strategic consumer behavior, and study the relationship between the proportion of strategic consumers, pre discount and purchase restriction strategies, and channel optimal pricing.
- Analyze the advantages of supply chain pricing combination strategies in the current environment, providing theoretical guidance and decision-making basis for managers to solve pricing problems in complex environments.
- The current version of model description part is required to improve in terms of structure and exposition. First, I think that would be helpful to rewrite the model part to increase readability. Second, after revision, the authors should carefully proofread their manuscript since the current version contains too many editorial errors, which makes the model development and analysis seem confusing and easily distracting.
We have made systematic revisions for the original manuscript. Please review the submitted original text. Thank you for your valuable feedback on the accuracy of the paper's expression.
For example, L256-257 pt1 and pt2 are not appropriately expressed, where T1 and T2 should be subscripts. L295 pm is not appropriately expressed. L303-307, p1 and p2 are not appropriately expressed.
and have been corrected in the entire text. and have been also corrected in the entire text. has been corrected, and , have been modified.
Author Response File: Author Response.pdf
Round 2
Reviewer 2 Report
I think the revision is quite well.
