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The selling strategy on dual-channel on-line discounts considering loss preferences

Yang Guang;Liu Xinwang;School of Economics and Management, Southeast University;  
Assuming a monopoly seller sells his products to consumers, who are divided into loss neutral and loss averse ones, via physical or online shop and who provides online price discounts. Firstly, the channel selection strategies for different consumers and the effects of loss averse consumers on the seller's optimal profits are considered. Numerical results illustrate that loss averse consumers have negative impacts on the seller's optimal revenue. Secondly, the expected profit differences among different discounts situations are analyzed, and the results show that the channel selection of the seller is influenced by the price and the consumers' acceptance degree for online sales channel. Finally, the mechanism of how the price and consumers' acceptance degree affect the expected profit differences among different price discount situations are discussed, and a business case and its analysis are given.
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