Footnote 1 Meanwhile, the phenomena of m-commerce has created new business development opportunities for the launch of handheld devices that facilitate users’ experience when consuming digital products (Kalakota and Robinson 2000). The introduction of digital formats (i.e., e-products) such as music MP3s and e-books that can be instantly purchased and consumed on mobile devices illustrates this revolution in some industries (Grewal et al. The proliferation of transaction websites, the growth of product digitization and the expansion of mobile commerce (i.e., m-commerce) are some of the major retail developments driven by the digital revolution in the last two decades. (3) The double marginalization effect could benefit the manufacturer. ![]() (2) The manufacturer is interested in an RSC only if it receives a sufficiently large part of the digital-product revenue, but the retailer is almost always interested by this pricing model. Our main results are as follows: (1) The presence of the contingent product leads to a higher retail price for the digital base product and negatively affects the demand for the tangible product format. The second question investigates whether the manufacturer is interested in the implementation of an RSC and then looks at whether this pricing model suits the retailer and consumers. We investigate two questions: The first one pertains to the contingent product’s impact on firms’ pricing strategies. ![]() The latter also sells an optional contingent product, a device used to consume the digital product. We examine a manufacturer-retailer framework where the manufacturer sells a base product in two formats: a tangible product sold directly to consumers and a digital format sold via an online retailer. In many industries, these developments resulted in switching from traditional wholesale pricing to Revenue-Sharing Contracts (RSC), involving a shift of control over retail prices in the channel, a situation that was not always easily accepted by channel members. Many online retailers launched their own mobile devices, which had a direct effect on their multi-product pricing strategies, but also an effect on the other channel members’ pricing decisions (i.e., digital-content providers). The technological developments observed in the last two decades contributed to the digitalization of products and the introduction of various mobile devices designed for the consumption of this digital content.
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