IDEAS home Printed from https://ideas.repec.org/a/pal/jorsoc/v67y2016i11d10.1057_jors.2016.29.html
   My bibliography  Save this article

E-retailing of restaurant services: pricing strategies in a competing online environment

Author

Listed:
  • Xiabing Zheng

    (University of Science and Technology of China)

  • Xiaolong Guo

    (University of Science and Technology of China)

Abstract

Establishing online channels and providing online discounts by building business partner relationships with third-party websites have emerged as important and effective marketing strategies in the restaurant industry. This study examines the optimal pricing strategy of restaurants in a competing environment when they participate in this relationship with a third-party website. Results suggest that neither participation nor online price discount should be encouraged for all restaurants. In particular, for a restaurant with a fixed service capacity, participation and online price discount are recommended when the number of offline loyal customers is relatively small. With the increase in the number of loyal offline customers, the optimal online discount rate decreases, whereas the unit commission fee for the third-party website remains constant. When the optimal discount rate reaches zero, the optimal decision for the restaurant is to decrease the unit commission fee. Based on these findings, this study analytically provides the optimal pricing strategies for restaurants and the corresponding boundaries for the strategy set.

Suggested Citation

  • Xiabing Zheng & Xiaolong Guo, 2016. "E-retailing of restaurant services: pricing strategies in a competing online environment," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(11), pages 1408-1418, November.
    • Handle: RePEc:pal:jorsoc:v:67:y:2016:i:11:d:10.1057_jors.2016.29
    DOI: 10.1057/jors.2016.29
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/jors.2016.29
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/jors.2016.29?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. Rabah Amir & Val E. Lambson, 2000. "On the Effects of Entry in Cournot Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(2), pages 235-254.
    2. Özelkan, Ertunga C. & ÇakanyIldIrIm, Metin, 2009. "Reverse bullwhip effect in pricing," European Journal of Operational Research, Elsevier, vol. 192(1), pages 302-312, January.
    3. Eunkyu Lee & Richard Staelin & Weon Sang Yoo & Rex Du, 2013. "A “Meta-Analysis” of Multibrand, Multioutlet Channel Systems," Management Science, INFORMS, vol. 59(9), pages 1950-1969, September.
    4. 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.
    5. Simon GB Cowan & Simon Cowan, 2004. "Demand shifts and imperfect competition," Economics Series Working Papers 188, University of Oxford, Department of Economics.
    6. 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.
    7. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    8. Caroline Freund & Diana Weinhold, 2002. "The Internet and International Trade in Services," American Economic Review, American Economic Association, vol. 92(2), pages 236-240, May.
    9. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
    10. Yoon, Moon Gil & Yoon, Duk Young & Yang, Tae Won, 2006. "Impact of e-business on air travel markets: Distribution of airline tickets in Korea," Journal of Air Transport Management, Elsevier, vol. 12(5), pages 253-260.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hui Zhang & Kai Luo & Guanqun Ni, 2022. "The effects of price subsidy and fairness concern on pricing and benefits of take-away supply chain," Journal of Combinatorial Optimization, Springer, vol. 43(5), pages 1106-1124, July.
    2. Hui Zhang & Kai Luo & Guanqun Ni, 0. "The effects of price subsidy and fairness concern on pricing and benefits of take-away supply chain," Journal of Combinatorial Optimization, Springer, vol. 0, pages 1-19.
    3. Peng Zhang & Sisi Ju & Hongfu Huang, 2022. "Can a Restaurant Benefit from Joining an Online Take-Out Platform?," Mathematics, MDPI, vol. 10(9), pages 1-17, April.
    4. Du, Zhong & Fan, Zhi-Ping & Chen, Zhongwei, 2023. "Implications of on-time delivery service with compensation for an online food delivery platform and a restaurant," International Journal of Production Economics, Elsevier, vol. 262(C).
    5. Jingmei Xu & Li Hu & Xiaolong Guo & Xia Yan, 2020. "Online cooperation mechanism: game analysis between a restaurant and a third-party website," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(1), pages 61-73, February.

    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. Özelkan, Ertunga C. & Lim, Churlzu & Adnan, Ziaul Haq, 2018. "Conditions of reverse bullwhip effect in pricing under joint decision of replenishment and pricing," International Journal of Production Economics, Elsevier, vol. 200(C), pages 207-223.
    2. David, Maia & Nimubona, Alain-Désiré & Sinclair-Desgagné, Bernard, 2011. "Emission taxes and the market for abatement goods and services," Resource and Energy Economics, Elsevier, vol. 33(1), pages 179-191, January.
    3. Longyuan Du & Ming Hu & Jiahua Wu, 2022. "Contingent stimulus in crowdfunding," Production and Operations Management, Production and Operations Management Society, vol. 31(9), pages 3543-3558, September.
    4. 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.
    5. Yuecheng Yu & Alexander Pelaez & Karl R. Lang, 2016. "Designing and evaluating business process models: an experimental approach," Information Systems and e-Business Management, Springer, vol. 14(4), pages 767-789, November.
    6. Simone Marinesi & Karan Girotra & Serguei Netessine, 2018. "The Operational Advantages of Threshold Discounting Offers," Management Science, INFORMS, vol. 64(6), pages 2690-2708, June.
    7. Oksana Loginova & Andrea Mantovani, 2019. "Price competition in the presence of a web aggregator," Journal of Economics, Springer, vol. 126(1), pages 43-73, January.
    8. 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.
    9. Jiahua Wu & Mengze Shi & Ming Hu, 2015. "Threshold Effects in Online Group Buying," Management Science, INFORMS, vol. 61(9), pages 2025-2040, September.
    10. O. Loginova & A. Mantovani, 2015. "Information and Online Reviews," Working Papers wp996, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.
    12. Rong Zhang & Bin Liu, 2017. "Group buying decisions of competing retailers with emergency procurement," Annals of Operations Research, Springer, vol. 257(1), pages 317-333, October.
    13. Özelkan, Ertunga C. & ÇakanyIldIrIm, Metin, 2009. "Reverse bullwhip effect in pricing," European Journal of Operational Research, Elsevier, vol. 192(1), pages 302-312, January.
    14. Zhuoxin Li & Jason A. Duan, 2014. "Dynamic Strategies for Successful Online Crowdfunding," Working Papers 14-09, NET Institute.
    15. Upender Subramanian & Ram C. Rao, 2016. "Leveraging Experienced Consumers to Attract New Consumers: An Equilibrium Analysis of Displaying Deal Sales by Daily Deal Websites," Management Science, INFORMS, vol. 62(12), pages 3555-3575, December.
    16. Almehdawe, Eman & Mantin, Benny, 2010. "Vendor managed inventory with a capacitated manufacturer and multiple retailers: Retailer versus manufacturer leadership," International Journal of Production Economics, Elsevier, vol. 128(1), pages 292-302, November.
    17. Yongmin Chen & Tianle Zhang, 2015. "Interpersonal Bundling," Management Science, INFORMS, vol. 61(6), pages 1456-1471, June.
    18. 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.
    19. 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.
    20. Jingmei Xu & Li Hu & Xiaolong Guo & Xia Yan, 2020. "Online cooperation mechanism: game analysis between a restaurant and a third-party website," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(1), pages 61-73, February.

    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:pal:jorsoc:v:67:y:2016:i:11:d:10.1057_jors.2016.29. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    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.