Competition in multichannel expert services in duopoly
Journal of Modelling in Management
ISSN: 1746-5664
Article publication date: 23 September 2019
Issue publication date: 4 October 2019
Abstract
Purpose
This study aims to describe the general picture of the competition in multichannel expert services in duopoly market and discuss how the quality difference may affects the competition between service providers with different quality levels, where both providers offer face-to-face channel and one of providers offers online channel additionally and service quality that consumers have heterogeneous preferences for is vertically differentiated. These results can be used to determine which service providers should offer online expert services and understand the competition in multichannel expert services in duopoly.
Design/methodology/approach
This paper uses the stylized vertical differentiation model to investigate the role of quality in expert services market, assuming that two services providers offer the same services with different quality levels and one of them having additional online services. Taking into account the differences of services from products and the particularity of online service, this paper extends the vertical differentiation model to expert services market.
Findings
The quality difference is the key factor in the competition of expert services. Service prices and the profits of providers, independent of the quality levels, are positively related to the quality difference, whereas the demand of online services is in the opposite direction regardless of which provider offers online channel. It demonstrates that provider with low-quality level should open online channel from the point of view of social welfare if it is closely related to the expert services, even though any provider can make more profits by opening online channel.
Research limitations/implications
This extended vertical differentiation model, taking into account the importance of vertical differentiation in expert service, ignores the horizontal differentiation. More accurate strategies for multichannel expert services providers with what level of the quality a provider should offer is needed in future work. Moreover, this paper does not consider the different waiting costs of consumers in face-to-face channel and assumes that their problem will be solved eventually.
Originality/value
To the best of the author’s knowledge, no study has focused on the quality difference in multichannel expert services market or discussed how to offer online expert services in the duopoly market. This study extends the vertical differentiation model to the multichannel expert service market. Therefore, it fills this research gap and extends research to expert services market in the new network environment, aiming to help understand the competition in multichannel expert services.
Keywords
Acknowledgements
The author would like to thank the National Natural Science Foundation of China (Grant nos. 71631006, 71601173 and 71701195) for their financial supports.
Citation
Xiao, H. (2019), "Competition in multichannel expert services in duopoly", Journal of Modelling in Management, Vol. 14 No. 4, pp. 1088-1104. https://doi.org/10.1108/JM2-02-2019-0030
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited