New product design under channel acceptance: Brick-and-mortar, online-exclusive or brick-and-click

摘要

With traditional brick-and-mortar retailers entering into the new brick-and-click era, manufacturers respond differently by trying to either enhance or lower the quality of their new product offerings. However, the manufacturer's optimal product design strategy when such a retailer expands online has been examined in the present context. The study focuses on how a manufacturer may use product design to influence a dual-channel retailer's channel outlet designation decision. The study also investigates how the profits of the manufacturer and the retailer are affected by the latter's decision to operate in dual channels. Two basic assumptions are made 1. First, the manufacturer must ensure that the retailer is willing to participate in the trade, and 2. The manufacturer faces the certain tradeoffs such as physical display of the new product, when deciding whether to design the new product to target the retailer's offline or online store. Based on a game-theoretic model, the study captures the tradeoffs faced by the new product manufacturer. The results are discussed in terms of three scenarios and four propositions are generated. Ten model relaxations are made and the results of the model extensions are done. The article concludes with some managerial insights. (58 refs.)