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Behavior-Based Pricing in Marketing Channels

Author:

Krista J. LiAuthors Info & Claims

Marketing Science, Volume 37, Issue 2

Pages 310 - 326

https://doi.org/10.1287/mksc.2017.1070

Published: 01 March 2018 Publication History

Abstract

With behavior-based pricing BBP, firms use customers' purchase history data to price discriminate between past and new customers. Prior research has examined BBP in a non-channel setting. In this paper, we investigate BBP in a channel setting in which manufacturers sell to customers through exclusive retailers. We examine how channel members' adoption of BBP affects wholesale and retail prices, profits, consumer surplus, and social welfare. We find that BBP decreases channel members' profits when retailers use BBP and manufacturers use uniform pricing. However, BBP increases channel members' profits when manufacturers and retailers use BBP. In addition, BBP by retailers alone increases consumer surplus, whereas BBP by manufacturers and retailers decreases consumer surplus. When manufacturers also use BBP, BBP decreases social welfare to a greater degree than when only retailers use BBP. Furthermore, when manufacturers cannot use BBP, their profits are higher with long-term wholesale price contracts. When manufacturers can use BBP, short-term wholesale price contracts yield higher profits for manufacturers and retailers.

The online appendix is available at <ext-link ext-link-type="uri" href="https://doi.org/10.1287/mksc.2017.1070">https://doi.org/10.1287/mksc.2017.1070</ext-link>.

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Cited By

He PWang TShang QZhang JXu H(2024)Knowledge mapping of e-commerce supply chain management: a bibliometric analysisElectronic Commerce Research10.1007/s10660-022-09609-w24:3(1889-1925)Online publication date: 1-Sep-2024
https://dl.acm.org/doi/10.1007/s10660-022-09609-w
Jullien BReisinger MRey P(2023)Personalized Pricing and Distribution StrategiesManagement Science10.1287/mnsc.2022.443769:3(1687-1702)Online publication date: 1-Mar-2023
https://dl.acm.org/doi/10.1287/mnsc.2022.4437
Hsieh CLathifah A(2023)Brick-and-mortar retailer’s competitive strategy with consumer information under showroomingDecision Support Systems10.1016/j.dss.2023.114014174:COnline publication date: 1-Nov-2023
https://dl.acm.org/doi/10.1016/j.dss.2023.114014
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cover image Marketing Science

Marketing Science Volume 37, Issue 2

March 2018

155 pages

ISSN:1526-548X

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Publisher

INFORMS

Linthicum, MD, United States

Publication History

Published: 01 March 2018

Accepted: 02 September 2017

Received: 06 July 2016

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Cited By

He PWang TShang QZhang JXu H(2024)Knowledge mapping of e-commerce supply chain management: a bibliometric analysisElectronic Commerce Research10.1007/s10660-022-09609-w24:3(1889-1925)Online publication date: 1-Sep-2024
https://dl.acm.org/doi/10.1007/s10660-022-09609-w
Jullien BReisinger MRey P(2023)Personalized Pricing and Distribution StrategiesManagement Science10.1287/mnsc.2022.443769:3(1687-1702)Online publication date: 1-Mar-2023
https://dl.acm.org/doi/10.1287/mnsc.2022.4437
Hsieh CLathifah A(2023)Brick-and-mortar retailer’s competitive strategy with consumer information under showroomingDecision Support Systems10.1016/j.dss.2023.114014174:COnline publication date: 1-Nov-2023
https://dl.acm.org/doi/10.1016/j.dss.2023.114014
Chen QLiu ZTian LQin X(2023)In-store, pre-warehouse, or store-and-warehouse integrationComputers and Industrial Engineering10.1016/j.cie.2023.109085177:COnline publication date: 1-Mar-2023
https://dl.acm.org/doi/10.1016/j.cie.2023.109085
Xu ZDukes A(2022)Personalization from Customer Data Aggregation Using List PriceManagement Science10.1287/mnsc.2021.397768:2(960-980)Online publication date: 1-Feb-2022
https://dl.acm.org/doi/10.1287/mnsc.2021.3977
Xu MTang WZhou C(2019)Price discrimination based on purchase behavior and service cost in competitive channelsSoft Computing - A Fusion of Foundations, Methodologies and Applications10.1007/s00500-019-03760-724:4(2567-2588)Online publication date: 18-Jan-2019
https://dl.acm.org/doi/10.1007/s00500-019-03760-7

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