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Research on Channel Strategy of Supply Chain Based on Product Quality Improvement and Experience

This paper considers a dual-channel supply chain in which the manufacturer opened the direct online channel. Firstly, the impact of manufacturer's optimal revenue and quantity under the homogeneous and differentiated quality encroachment are studied. Secondly, four models of channel selection are established, i.e., without quality improvement, dual-channel simultaneous quality improvement, and only the retail/direct channel quality improvement. Based on game theory, the corresponding analytical solutions are obtained. When the cost of effort on quality improvement are certain, the results show that, Manufacturers prefer to sell high-quality products directly to encroach retails who sell basic-quality goods. Furthermore, if experience of product is low, the quality of online products tends to be improved by manufacturer; if the product needs to be experienced, strategy of channel selection depends on the degree of the quality improvement.