Time:2019.05.09, 12:30-14:00 PM

Location:Room 615, Main Building  

KeynoteSpeaker:JingChen, Ph.D.，Professorof Rowe School of Business, Dalhousie University, Canada  

Abstract:We examine thecase of a manufacturer that must decide whether to sell its product directlyand/or indirectly through an independent retailer, and both the manufacturerand the retailer must decide on the level of service effort they will provide.When customers are dissatisfied with a product, they will make an extra trip toreturn that product. Sales service improves customers’ satisfaction with aproduct and reduces customer returns. however, providing that service may becostly for the seller, and not all service leads to immediate sales. Inparticular, when a channel provides a high level of service, some customers mayfirst visit this channel’s store to take advantage of the service, only to turnaround and buy the product from a cheaper channel (freeriding). This paperexamines the impact of customers’freeriding behavior on a manufacturer's channel strategy. We findthat the cost bearer of freeriding (i.e., the firm on which the customersfreeride) can be better off, while, at the same time, the benefiter offreeriding (i.e., the firm the freeriding customers purchase the product from)can be worse off when customers can freeride. We also find that when customerscan freeride, even though they have the flexibility of choosing where to buyafter enjoying service, total demand may be smaller.