IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v270y2024ics0925527324000276.html
   My bibliography  Save this article

Group buying in multiple channels with consideration of heterogeneous customers

Author

Listed:
  • Huang, Yeu-Shiang
  • Ho, Jyh-Wen
  • Lee, Chang-Lin

Abstract

Group buying can create high demand for firms in a short period by offering significant price discounts to attract more consumers who are unfamiliar with the items and enhance their willingness to make purchases. However, group buying may negatively affect sales profits; thus, firms must consider the pros and cons of participating in a third-party group-buying platform. This study considers a firm that offers a new product through the direct channel, i.e., brick and mortar stores, and may also be on a third-party group-buying website; additionally, it develops a two-stage game model in which heterogeneous consumers with different perceived values for the new product are classified into strategic and group-buying consumers to investigate whether cooperating with a group-buying website would earn more profits for the firm. The contribution of this study is the proposed game model for adequately assessing both brick and mortar and group-buying sales under channel competition. The results of the investigation show that high network externalities can elevate retail prices and group-buying quantities but lower wholesale prices. If only one channel is considered, cooperating merely with the group-buying website is more profitable than cooperating with a single sales channel. In addition, third-party group-buying websites can offer appropriate promotional programs to improve demand and profit, and as a result, a win–win situation can be achieved.

Suggested Citation

  • Huang, Yeu-Shiang & Ho, Jyh-Wen & Lee, Chang-Lin, 2024. "Group buying in multiple channels with consideration of heterogeneous customers," International Journal of Production Economics, Elsevier, vol. 270(C).
    • Handle: RePEc:eee:proeco:v:270:y:2024:i:c:s0925527324000276
    DOI: 10.1016/j.ijpe.2024.109170
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527324000276
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2024.109170?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yuxin Chen & Jinhong Xie, 2007. "Cross-Market Network Effect with Asymmetric Customer Loyalty: Implications for Competitive Advantage," Marketing Science, INFORMS, vol. 26(1), pages 52-66, 01-02.
    2. Zhang, Guoquan & Shang, Jennifer & Yildirim, Pinar, 2016. "Optimal pricing for group buying with network effects," Omega, Elsevier, vol. 63(C), pages 69-82.
    3. Krishnan S. Anand & Ravi Aron, 2003. "Group Buying on the Web: A Comparison of Price-Discovery Mechanisms," Management Science, INFORMS, vol. 49(11), pages 1546-1562, November.
    4. Xiaoqing Jing & Jinhong Xie, 2011. "Group Buying: A New Mechanism for Selling Through Social Interactions," Management Science, INFORMS, vol. 57(8), pages 1354-1372, August.
    5. Guanqun Ni & Yinfeng Xu & Jiuping Xu & Yucheng Dong, 2015. "Optimal decisions for fixed-price group-buying business originated in China: a game theoretic perspective," International Journal of Production Research, Taylor & Francis Journals, vol. 53(10), pages 2995-3005, May.
    6. Liang, Xiaoying & Ma, Lijun & Xie, Lei & Yan, Houmin, 2014. "The informational aspect of the group-buying mechanism," European Journal of Operational Research, Elsevier, vol. 234(1), pages 331-340.
    7. Tran, Thanh & Desiraju, Ramarao, 2017. "Group-buying and channel coordination under asymmetric information," European Journal of Operational Research, Elsevier, vol. 256(1), pages 68-75.
    8. Fei Gao & Jian Chen, 2015. "The Role of Discount Vouchers in Market with Customer Valuation Uncertainty," Production and Operations Management, Production and Operations Management Society, vol. 24(4), pages 665-679, April.
    9. Kay-Yut Chen & Murat Kaya & Özalp Özer, 2008. "Dual Sales Channel Management with Service Competition," Manufacturing & Service Operations Management, INFORMS, vol. 10(4), pages 654-675, June.
    10. Wang, Jeff Jianfeng & Zhao, Xin & Li, Julie Juan, 2013. "Group Buying: A Strategic Form of Consumer Collective," Journal of Retailing, Elsevier, vol. 89(3), pages 338-351.
    11. Zhou, Yuan & Xie, Jinxing, 2014. "Potentially self-defeating: Group buying in a two-tier supply chain," Omega, Elsevier, vol. 49(C), pages 42-52.
    12. Anantaram Balakrishnan & Shankar Sundaresan & Bo Zhang, 2014. "Browse-and-Switch: Retail-Online Competition under Value Uncertainty," Production and Operations Management, Production and Operations Management Society, vol. 23(7), pages 1129-1145, July.
    13. Yung-Ming Li & Jhih-Hua Jhang-Li & Ting-Kai Hwang & Ping-Wen Chen, 2012. "Analysis of pricing strategies for community-based group buying: The impact of competition and waiting cost," Information Systems Frontiers, Springer, vol. 14(3), pages 633-645, July.
    14. Siva Viswanathan, 2005. "Competing Across Technology-Differentiated Channels: The Impact of Network Externalities and Switching Costs," Management Science, INFORMS, vol. 51(3), pages 483-496, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guanqun Ni, 2019. "A pricing model for group buying based on network effects," PLOS ONE, Public Library of Science, vol. 14(1), pages 1-18, January.
    2. Sun, Shuxing & Zhang, Bin, 2022. "Operation strategies for nanostore in community group buying," Omega, Elsevier, vol. 110(C).
    3. Zhang, Guoquan & Shang, Jennifer & Yildirim, Pinar, 2016. "Optimal pricing for group buying with network effects," Omega, Elsevier, vol. 63(C), pages 69-82.
    4. Chenxu Ke & Bo Yan & Ruofan Xu, 2017. "A group-buying mechanism for considering strategic consumer behavior," Electronic Commerce Research, Springer, vol. 17(4), pages 721-752, December.
    5. Oktay Karabağ & Barış Tan, 2018. "Analysis of a group purchasing organization under demand and price uncertainty," Flexible Services and Manufacturing Journal, Springer, vol. 30(4), pages 844-883, December.
    6. Bi, Gongbing & Geng, Botao & Liu, Lindong, 2019. "On the fixed and flexible funding mechanisms in reward-based crowdfunding," European Journal of Operational Research, Elsevier, vol. 279(1), pages 168-183.
    7. Caixia Hao & Lei Yang, 2024. "Fission marketing on social media platforms with consumer sentiment considerations," Electronic Commerce Research, Springer, vol. 24(3), pages 2143-2173, September.
    8. Shen-Tsu Wang, 2016. "Analysis of Life Context of On-Line Group-Buying Population by Dynamic Decision," Asian Journal of Social Sciences and Management Studies, Asian Online Journal Publishing Group, vol. 3(3), pages 173-181.
    9. Tianhua Zhang & Juliang Zhang & Fu Zhao & Yihong Ru & John W. Sutherland, 2020. "Allocating resources for a restaurant that serves regular and group-buying customers," Electronic Commerce Research, Springer, vol. 20(4), pages 883-913, December.
    10. Erbao Cao & He Li, 2020. "Group buying and consumer referral on a social network," Electronic Commerce Research, Springer, vol. 20(1), pages 21-52, March.
    11. Tran, Thanh & Desiraju, Ramarao, 2017. "Group-buying and channel coordination under asymmetric information," European Journal of Operational Research, Elsevier, vol. 256(1), pages 68-75.
    12. Qijun Qiu & Ying-Ju Chen & Benjamin P.-C. Yen, 2018. "The Implications of Group-Buying as a Channel Option Under Capacity Constraint," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(04), pages 1-32, August.
    13. Tommy Cheung & Wai Hung Wong & Ricky S. Wong & Jia Zhu, 2016. "Does Online Group Buying Benefit or Destroy Retail Businesses?," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 15(1), pages 1-16, June.
    14. Sheng Li & Huifang Feng & Yu Huang, 2017. "Pricing for Products in Website-Dominant Static Group-buying," Business and Management Research, Business and Management Research, Sciedu Press, vol. 6(3), pages 94-101, September.
    15. Tong Che & Zeyu Peng & Zhongsheng Hua, 2016. "Characteristics of online group-buying website and consumers intention to revisit: the moderating effects of visit channels," Electronic Commerce Research, Springer, vol. 16(2), pages 171-188, June.
    16. Shuhan Xu & Tianrui Chen, 2023. "Research on Optimal Group-Purchase Threshold and Pricing Strategy of Community Group Purchase," Mathematics, MDPI, vol. 11(24), pages 1-18, December.
    17. Li, Jianfei & Li, Bei & Shen, Yang & Tang, Kun, 2022. "Study on the steady state of the propagation model of consumers’ perceived service quality in the community group-buying," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).
    18. Bangwool Han & Minho Kim, 2019. "Hofstede’s Collectivistic Values and Sustainable Growth of Online Group Buying," Sustainability, MDPI, vol. 11(4), pages 1-15, February.
    19. Mingming Shi & Jun Zhou & Zhou Jiang, 2019. "Consumer heterogeneity and online vs. offline retail spatial competition," Frontiers of Business Research in China, Springer, vol. 13(1), pages 1-19, December.
    20. Shao, Xiao-Feng, 2017. "Free or calculated shipping: Impact of delivery cost on supply chains moving to online retailing," International Journal of Production Economics, Elsevier, vol. 191(C), pages 267-277.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:270:y:2024:i:c:s0925527324000276. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.