Pricing policies in a dual-channel supply chain with retail services

With the rapid development of the Internet, many manufacturers nowadays are increasingly adopting a dual-channel to sell their products, i.e., the traditional retail channel and online direct channel. This paper examines the optimal decisions on retail services and prices in a centralized and a decentralized dual-channel supply chain using the two-stage optimization technique and Stackelberg game, and evaluates the impacts of retail services and the degree of customer loyalty to the retail channel on the manufacturer and retailer's pricing behaviors. The results show that retail services strongly influence the manufacturer and the retailer's pricing strategies. Numerical studies reveal that the ratio of demand relative increase and the degree of customer loyalty to the retail channel have great effects on the retail services and pricing decisions.