Please use this identifier to cite or link to this item:
http://hdl.handle.net/10397/43837
| Title: | Signalling effect of daily deal promotion for a start-up service provider | Authors: | Zhao, M Wang, Y Gan, X |
Issue Date: | 2016 | Source: | Journal of the Operational Research Society, 2016, v. 67, no. 2, p. 280-293 | Abstract: | In this paper, we consider a start-up service provider that decides whether to advertise its service product by offering temporary daily deal promotion. Based on the repeat purchase mechanism, we show that both the commission rate (ie, the revenue-sharing ratio) charged by the daily deal site and the discount level offered by the service provider play important roles in signalling the initially unobservable quality level of the service provider. A high commission rate can facilitate the signalling of the daily deal promotion, and in equilibrium only the high-quality service provider would do daily deal promotion. We find that if the daily deal site adopts a two-part tariff charging scheme, the high-quality service provider can always signal its quality by offering daily deals. And the two-part tariff leads to a lower signalling cost but a higher repeat purchase rate than those under the revenue-sharing if the variable cost of the low-quality service provider is not too large. | Keywords: | Advertising Daily deal promotion Quality Repeat customer Signaling |
Publisher: | Palgrave Macmillan | Journal: | Journal of the Operational Research Society | ISSN: | 0160-5682 | EISSN: | 1476-9360 | DOI: | 10.1057/jors.2014.47 | Rights: | © 2016 Operational Research Society Ltd. All rights reserved. Posted with permission of the publisher. This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of the Operational Research Society, 2016, available online at https://www.tandfonline.com/doi/full/10.1057/jors.2014.47. You will also need to obtain permission from any co-author’s of this article. |
| Appears in Collections: | Journal/Magazine Article |
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| File | Description | Size | Format | |
|---|---|---|---|---|
| 1596_signalling-JORS-Final.pdf | Pre-Published version | 946.23 kB | Adobe PDF | View/Open |
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