Adapting to the digital marketplace: manufacturer channel selection in the age of consumer migration

Purpose - This study aims to examine manufacturers’ strategic responses to consumer migration from offline to online channels, focusing on how these shifts affect their channel selection and business strategies. Design/methodology/approach - This research uses a theoretical framework using a Stackelberg game model to analyze manufacturers’ decision-making processes amid evolving consumer behaviors. It intricately explores the strategic implications across three distinct channel structures: manufacturer direct sales (MD), retailer resale (RR) and retailer agency (RA), focusing on their economic outcomes and market dynamics. This approach is instrumental in decoding the multifaceted nature of channel migration and its impact on manufacturer–retailer relationships in the digital marketplace. Findings - The research reveals that in MD and RA scenarios, as channel migration intensifies, manufacturers tend to lower both wholesale and online retail prices. Conversely, in the RR scenario, the set wholesale price is intricately linked to the market share, with higher prices set for smaller offline market shares. From a strategic standpoint, MD emerges as the optimal choice for maximizing manufacturer profits, while RA takes precedence when considering the entire supply chain’s profitability, particularly under high commission costs. Originality/value - This research illuminates the impact of channel migration on manufacturers’ pricing strategies and channel selection. It not only advances the understanding of consumer behavior in multichannel retail environments but also offers practical insights for businesses in effectively managing online and offline channels.