Pricing strategies in mobile phone dual-channel supply chain: A case study with application to Tele2

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Volume Title

School of Business | Master's thesis

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Date

2024

Department

Tieto- ja palvelujohtamisen laitos

Major/Subject

Mcode

Degree programme

Business analytics

Language

en

Pages

48

Series

Abstract

The thesis adopts an established model framework to study the pricing problem in the dual-channel supply chain of mobile phone manufacturer and telecom operator. In this supply chain, products are sold through two channels: a bundled channel, where the phone is sold together with a telecom service plan, and an unbundled channel, where the phone and the service plan are sold separately. The thesis analyzes impacts of various market factors on supply chain performance under three channel coordination scenarios: centralized model, subsidy model, and two-way revenue-sharing model. Based on real data from the Swedish operator Tele2, this thesis employs Monte Carlo Method for sensitivity analysis. The results indicate that higher mobile phone price elasticity leads to a decrease in the optimal pricing for both channels. However, under high price elasticity, although pricing decreases, the increase in sales volume is insufficient to offset the reduction in unit revenue, resulting in a narrowing profit margin. Higher cross-price elasticity intensifies channel competition, causing the optimal pricing for both channels to rise and thereby increasing overall profits. When consumer preference for the bundled channel increases, optimal pricing for the bundled channel increases, while the optimal pricing for the unbundled channels decreases. The two-way revenue-sharing model coordinates the two channels effectively and realizes a balanced distribution of overall profits by adjusting revenue sharing portions. Based on the sensitivity analysis results, this thesis provides pricing recommendations for both manufacturers and operators, and discusses their strategic interactions under different scenarios to maximize their interests. Additionally, it emphasizes the need for both parties to flexibly adjust their pricing strategies by comprehensively considering the combined influence of multiple factors in practical applications to achieve supply chain coordination.

Description

Thesis advisor

Liesiö, Juuso

Keywords

pricing, dual-channel supply chain, channel coordination, sensitivity analysis

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Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202408255608

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[gradu] Kauppakorkeakoulu / BIZ