Underlying mechanisms of strategy interaction between brand promotion and sales channel strategies

Many e-marketplaces have introduced e-commerce brands (EBs) simultaneously displayed on the same platform with national brands (NBs), resulting in direct competition with NBs. This work uses game theory to study the underlying mechanisms of strategy interaction between the e-marketplace’s brand promotion and the NB seller’s sales channel strategies. We find that the e-marketplace should not blindly promote the EB since its optimal brand-promotion strategy depends on the market factors. Interestingly, when faced with the NB seller’s agency channel or dual-channel strategy, the e-marketplace which engages in EB promotion attempts to mitigate NB seller’s resistance and make up for the partial loss brought to the NB seller by reducing the commission fee. The NB seller should use the dual-channel regardless of the e-marketplace’s brand-promotion strategy. Moreover, when the competition intensity between the two brands is moderate, the brand promotion conversion rate is relatively low, and consumers’ recognition of the EB is relatively high, using the dual-channel and promoting the NB could lead to a “win–win–win” outcome for the NB seller, e-marketplace, and consumers, and further advance the sustainable development of the supply chain.