Facing a complex environment driven by a decade, many companies are adopting new strategic frameworks such as Customer Relationship Management system to achieve sustainable profitability as well as overcome serious competition for survival. In many business areas, CRM system advanced a great deal in a matter of continuous compensating the defect and overall integration. However, pharmaceutical companies in Korea were slow to accept them for usesince they still have a tendency of holding fast to traditional way of sales and marketing based on individual networks of sales representatives. In the circumstance, this article tried to empirically address current status of CRM system as well as the effects of the system on the performance of pharmaceutical companies by applying BSC method's four perspectives, from financial, customer, learning and growth and internal process. Survey by e-mail and post to employers and employees who were working in pharma firms were undergone for the purpose. Total 113 cases among collected 140 ones were used for the statistical analysis by SPSS ver. 15 package. Reliability, Factor analysis, regression were done. This study revealed that CRM system had a significant effect on improving financial and non-financial performance of pharmaceutical companies as expected. Proposed regression model fits well and among them, CRM marketing information system shed the light on substantial impact on companies' outcome given profitability, growth and investment. Useful analytical information by CRM marketing information system appears to enable pharmaceutical firms to set up effective marketing and sales strategies, these result in favorable financial performance by enhancing values for stakeholderseventually, not to mention short-term profit and/or mid-term potential to growth. CRM system depicted its influence on not only financial performance, but also non-financial fruit of pharmaceutical companies. Further analysis for each component showed that CRM marketing information system were able to demonstrate statistically significant effect on the performance like the result of financial outcome. CRM system is believed to provide the companies with efficient way of customers managing by valuable standardized business process prompt coping with specific customers' needs. It consequently induces customer satisfaction and retentionto improve performance for long period. That is, there is a virtuous circle for creating value as the cornerstone for sustainable growth. However, the research failed to put forward to evidence to support hypothesis regarding favorable influence of CRM sales representative's records assessment system and CRM customer analysis system on the management performance. The analysis is regarded to reflect the lack of understanding of sales people and respondents between actual work duties and far-sighted goal in strategic analysis framework. Ordinary salesmen seem to dedicate short-term goal for the purpose of meeting sales target, receiving incentive bonus in a manner-of-fact style, as such, they tend to avail themselves of personal network and sales and promotional expense rather than CRM system. The study finding proposed a link between CRM information system and performance. It empirically indicated that pharmaceutical companies had been implementing CRM system as an effective strategic business framework in order for more balanced achievements based on the grounded understanding of both CRM system and integrated performance. It suggests a positive impact of supportive CRM system on firm performance, especially for pharmaceutical industry through the initial empirical evidence. Also, it brings out unmet needs for more practical system design, improvement of employees' awareness, increase of system utilization in the field. On the basis of the insight from this exploratory study, confirmatory research by more appropriate measurement tool and increased sample size should be further examined.
The objective of this study is to examine how to maximize the efficiency of hospital management by minimizing the unit cost of hospital operation. For this purpose, this paper proposes to develop a model of the profit maximization based on the cost minimization dictum using the statistical tools of arriving at the maximum likelihood values. The preliminary survey data are collected from the annual statistics and their analyses published by Korea Health Industry Development Institute and Korean Hospital Association. The maximum likelihood value statistical analyses are conducted from the information on the cost (function) of each of 36 hospitals selected by the random stratified sampling method according to the size and location (urban or rural) of hospitals. We believe that, although the size of sample is relatively small, because of the sampling method used and the high response rate, the power of estimation of the results of the statistical analyses of the sample hospitals is acceptable. The conceptual framework of analyses is adopted from the various models of the determinants of hospital costs used by the previous studies. According to this framework, the study postulates that the unit cost of hospital operation is determined by the size, scope of service, technology (production function) as measured by capacity utilization, labor capital ratio and labor input-mix variables, and by exogeneous variables. The variables to represent the above cost determinants are selected by using the step-wise regression so that only the statistically significant variables may be utilized in analyzing how these variables impact on the hospital unit cost. The results of the analyses show that the models of hospital cost determinants adopted are well chosen. The various models analyzed have the (goodness of fit) overall determination (R2) which all turned out to be significant, regardless of the variables put in to represent the cost determinants. Specifically, the size and scope of service, no matter how it is measured, i. e., number of admissions per bed, number of ambulatory visits per bed, adjusted inpatient days and adjusted outpatients, have overall effects of reducing the hospital unit costs as measured by the cost per admission, per inpatient day, or office visit implying the existence of the economy of scale in the hospital operation. Thirdly, the technology used in operating a hospital has turned out to have its ramifications on the hospital unit cost similar to those postulated in the static theory of the firm. For example, the capacity utilization as represented by the inpatient days per employee tuned out to have statistically significant negative impacts on the unit cost of hospital operation, while payroll expenses per inpatient cost has a positive effect. The input-mix of hospital operation, as represented by the ratio of the number of doctor, nurse or medical staff per general employee, supports the known thesis that the specialized manpower costs more than the general employees. The labor/capital ratio as represented by the employees per 100 beds is shown to have a positive effect on the cost as expected. As for the exogeneous variable's impacts on the cost, when this variable is represented by the percent of urban 100 population at the location where the hospital is located, the regression analysis shows that the hospitals located in the urban area have a higher cost than those in the rural area. Finally, the case study of the sample hospitals offers a specific information to hospital administrators about how they share in terms of the cost they are incurring in comparison to other hospitals. For example, if his/her hospital is of small size and located in a city, he/she can compare the various costs of his/her hospital operation with those of other similar hospitals. Therefore, he/she may be able to find the reasons why the cost of his/her hospital operation has a higher or lower cost than other similar hospitals in what factors of the hospital cost determinants.
The
As the lifestyle of consumers changes and the need for various products increases, new products are being developed in the market. Each household owns various home appliances which are purchased through the choice of a decision maker. These appliances include not only large-sized products such as TV, refrigerator, and washing machine, but also small-sized products such as microwave oven and air cleaner. There exists latent correlation among possession of home appliances, even though they are purchased independently. The purpose of this research is to analyze the effect of demographic factors on the purchase and possession of each home appliances, and to derive some relationships among various appliances. To achieve this purpose, the present status on the possession of each home appliances are investigated through consumer survey data on the electric and energy product. And a multivariate probit(MVP) model is applied for the empirical analysis. From the estimation results, some appliances show a substitutive or complementary pattern as expected, while others which look apparently unrelated have correlation by co-incidence. This research has several advantages compared to previous literatures on home appliances. First, this research focuses on the various products which are purchased by each household, while previous researches such as Matsukawa and Ito(1998) and Yoon(2007) focus just on a particular product. Second, the methodology of this research can consider a choice process of each product and correlation among products simultaneously. Lastly, this research can analyze not only a substitutive or complementary relationship in the same category, but also the correlation among products in the different categories. As the data on the possession of home appliances in each household has a characteristic of multiple choice, not a single choice, a MVP model are used for the empirical analysis. A MVP model is derived from a random utility model, and has an advantage compared to a multinomial logit model in that correlation among error terms can be derive(Manchanda et al., 1999; Edwards and Allenby, 2003). It is assumed that the error term has a normal distribution with zero mean and variance-covariance matrix
As knowledge is paid attention as a new production factor that generates added value, studies continue to apply knowledge management to business environment. In addition, as ICT (Information Communication Technology) was engrafted in business environment, it leads to increasing task efficiency and productivity of individual workers. Accordingly, the way that a business achieves its goal has changed to one in which its individual members are willing to take part in the organization and share information to create new values (Han, 2003) and studies for the system and service to support such transition are carrying out. Of late, a new concept called 'Enterprise 2.0' newly appears. It is the extension of Wen 2.0 and its technology, which focus on participation, sharing and openness, to the work environment of a business (Jung, 2013). Enterprise 2.0 is being used as a collaborative tool to prop up individual creativity and group brain power by combining Web 2.0 technologies such as blog, Wiki, RSS and tag with business software (McAfee, 2006). As Tweeter gets popular, Enterprise Microblog (EMB), which is an example of Enterprise 2.0 for business, has been developed as equivalent to Tweeter in business circle and SaaS (Software as a Service) such as Yammer was introduced The studies of EMB mainly focus on demonstrating its usability in terms of intra-firm communication and knowledge management. However existing studies lean too much towards large-sized companies and certain departments, rather than a company as a whole. Therefore, few studies have been conducted on small and medium-sized companies that have difficulty preparing separate resources and supplying exclusive workforce to introduce knowledge management. In this respect, the present study placed its analytic focus on small-sized companies actually equipped with EMB to know how they use it. And, based on the findings, this study examined their knowledge management strategies for EMB from the point of codification and personalization. Hypothesis -"as a company grows, it shifts EMB strategy from codification to personalization'- was established on the basis of reviewing precedent studies and literature. To demonstrate the hypothesis, this study analyzed the usage of EMB by small companies that have used it from foundation. For case study, the duration of the use was divided into 2 spans and longitudinal analysis was employed to examine the contents of the blogs. Using the key findings of the analysis, this study is aimed to propose practical implications for the operation of knowledge management of small-sized company and the suitable application of knowledge management system for operation Knowledge Management Strategy can be classified by codification strategy and personalization strategy (Hansen et. al., 1999), and how to manage the two strategies were always studied. Also, current studies regarding the knowledge management strategy were targeted mostly for major companies, resulting in lack of studies in how it can be applied on SMEs. This research, with the knowledge management strategy suited for SMEs, sets an Enterprise Microblog (EMB), and with the EMB applied on SMEs' Knowledge Management Strategy, it is reviewed on the perspective of SMEs' Codification and Personalization Strategies. Through the advanced research regarding Knowledge Management Strategy and EMB, the hypothesis is set that "Depending on the development of the company, the main application of EMB alters from Codification Strategy to Personalization Strategy". To check the hypothesis, SME that have used the EMB called 'Yammer' was analyzed from the date of their foundation until today. The case study has implemented longitudinal analysis which divides the period when the EMBs were used into three stages and analyzes the contents. As the result of the study, this suggests a substantial implication regarding the application of Knowledge Management Strategy and its Knowledge Management System that is suitable for SME.
This paper was a quest of pattern of holding "Dae Hak - the Great Learning" during Joseon Period having investigated the characteristics of the Essentials of the Studies of the Sages(聖學輯要, Seong Hak Jibyo) that was compiled by Lee I was a reinterpretation of the Great Learning, and also academic enrichment. During the period of Joseon Dynasty, the Great Learning had held the most important position as core scripture in the intellectual society that pursued Seong Hak(聖學, sage learning). Throughout the Joseon Period, the Great Learning was the essential text for the Emperorship Learning(帝王學, Jewang Hak) as well as Seong Hak, and it can also be said that Seong Hak Jibyo compiled by Yulgok - the courtesy name of Lee I, was the comprehensive collections thereof. While compiling Seong Hak Jibyo, Yulgok presented a model of Seong Hak of Joseon, which was based on "the Great Learning". Yul Gok organized the system of "Seong Hak Jibyo" largely in five parts, and properly arranged the Three Cardinal Principles(三綱領, samgangryeong) and Eight Articles or Steps(八條目, paljomok) therein. Particularly, in the Chapter Two, "Cultivating Oneself(修己, sugi)", Yulgok deal with 'being able to manifest one's bright virtue'(明明德, myeong myeong deok) among the Three Cardinal Principles as the core curriculum, meanwhile, Yulgok also covered "Investigation of things, gyeongmul(格物)," "Extension of knowledge, chiji(致知)," "Sincerity of the will, Seongui(誠意)," "Rectification of the mind, Jeongshim(正心)," "Cultivation of the personal life, susin(修身)," among Paljomok(eight steps) as the ultimate purpose of 'Stopping in perfect goodness'(止於至善, jieojiseon) These well preserve the principal system of Confucianism where "Cultivating oneself and regulating others (修己治人, sugichiin)" are core value, and his instructions as such also back up academic validity logically by presenting specific guidelines for practice according to each domain. Reinterpretation of "The Great Learning" by Yulgok in Seong Hak Jibyo is an arena to investigate the characteristics of Confucianism in Joseon Period, which was different from that of China, furthermore, such guidelines might take a role as criteria to understand the characteristics of humans and learning possessed by Korean people.
Digital Convergence means integration between industry, technology, and contents, and in marketing, it usually comes with creation of new types of product and service under the base of digital technology as digitalization progress in electro-communication industries including telecommunication, home appliance, and computer industries. One can see digital convergence not only in instruments such as PC, AV appliances, cellular phone, but also in contents, network, service that are required in production, modification, distribution, re-production of information. Convergence in contents started around 1990. Convergence in network and service begins as broadcasting and telecommunication integrates and DMB(digital multimedia broadcasting), born in May, 2005 is the symbolic icon in this trend. There are some positive and negative expectations about DMB. The reason why two opposite expectations exist is that DMB does not come out from customer's need but from technology development. Therefore, customers might have hard time to interpret the real meaning of DMB. Time is quite critical to a high tech product, like DMB because another product with same function from different technology can replace the existing product within short period of time. If DMB does not positioning well to customer's mind quickly, another products like Wibro, IPTV, or HSPDA could replace it before it even spreads out. Therefore, positioning strategy is critical for success of DMB product. To make correct positioning strategy, one needs to understand how consumer interprets DMB and how consumer's interpretation can be changed via communication strategy. In this study, we try to investigate how consumer perceives a new product, like DMB and how AD strategy change consumer's perception. More specifically, the paper segment consumers into sub-groups based on their DMB perceptions and compare their characteristics in order to understand how they perceive DMB. And, expose them different printed ADs that have messages guiding consumer think DMB in specific ways, either cellular phone or personal TV. Research Question 1: Segment consumers according to perceptions about DMB and compare characteristics of segmentations. Research Question 2: Compare perceptions about DMB after AD that induces categorization of DMB in direction for each segment. If one understand and predict a direction in which consumer perceive a new product, firm can select target customers easily. We segment consumers according to their perception and analyze characteristics in order to find some variables that can influence perceptions, like prior experience, usage, or habit. And then, marketing people can use this variables to identify target customers and predict their perceptions. If one knows how customer's perception is changed via AD message, communication strategy could be constructed properly. Specially, information from segmented customers helps to develop efficient AD strategy for segment who has prior perception. Research framework consists of two measurements and one treatment, O1 X O2. First observation is for collecting information about consumer's perception and their characteristics. Based on first observation, the paper segment consumers into two groups, one group perceives DMB similar to Cellular phone and the other group perceives DMB similar to TV. And compare characteristics of two segments in order to find reason why they perceive DMB differently. Next, we expose two kinds of AD to subjects. One AD describes DMB as Cellular phone and the other Ad describes DMB as personal TV. When two ADs are exposed to subjects, consumers don't know their prior perception of DMB, in other words, which subject belongs 'similar-to-Cellular phone' segment or 'similar-to-TV' segment? However, we analyze the AD's effect differently for each segment. In research design, final observation is for investigating AD effect. Perception before AD is compared with perception after AD. Comparisons are made for each segment and for each AD. For the segment who perceives DMB similar to TV, AD that describes DMB as cellular phone could change the prior perception. And AD that describes DMB as personal TV, could enforce the prior perception. For data collection, subjects are selected from undergraduate students because they have basic knowledge about most digital equipments and have open attitude about a new product and media. Total number of subjects is 240. In order to measure perception about DMB, we use indirect measurement, comparison with other similar digital products. To select similar digital products, we pre-survey students and then finally select PDA, Car-TV, Cellular Phone, MP3 player, TV, and PSP. Quasi experiment is done at several classes under instructor's allowance. After brief introduction, prior knowledge, awareness, and usage about DMB as well as other digital instruments is asked and their similarities and perceived characteristics are measured. And then, two kinds of manipulated color-printed AD are distributed and similarities and perceived characteristics for DMB are re-measured. Finally purchase intension, AD attitude, manipulation check, and demographic variables are asked. Subjects are given small gift for participation. Stimuli are color-printed advertising. Their actual size is A4 and made after several pre-test from AD professionals and students. As results, consumers are segmented into two subgroups based on their perceptions of DMB. Similarity measure between DMB and cellular phone and similarity measure between DMB and TV are used to classify consumers. If subject whose first measure is less than the second measure, she is classified into segment A and segment A is characterized as they perceive DMB like TV. Otherwise, they are classified as segment B, who perceives DMB like cellular phone. Discriminant analysis on these groups with their characteristics of usage and attitude shows that Segment A knows much about DMB and uses a lot of digital instrument. Segment B, who thinks DMB as cellular phone doesn't know well about DMB and not familiar with other digital instruments. So, consumers with higher knowledge perceive DMB similar to TV because launching DMB advertising lead consumer think DMB as TV. Consumers with less interest on digital products don't know well about DMB AD and then think DMB as cellular phone. In order to investigate perceptions of DMB as well as other digital instruments, we apply Proxscal analysis, Multidimensional Scaling technique at SPSS statistical package. At first step, subjects are presented 21 pairs of 7 digital instruments and evaluate similarity judgments on 7 point scale. And for each segment, their similarity judgments are averaged and similarity matrix is made. Secondly, Proxscal analysis of segment A and B are done. At third stage, get similarity judgment between DMB and other digital instruments after AD exposure. Lastly, similarity judgments of group A-1, A-2, B-1, and B-2 are named as 'after DMB' and put them into matrix made at the first stage. Then apply Proxscal analysis on these matrixes and check the positional difference of DMB and after DMB. The results show that map of segment A, who perceives DMB similar as TV, shows that DMB position closer to TV than to Cellular phone as expected. Map of segment B, who perceive DMB similar as cellular phone shows that DMB position closer to Cellular phone than to TV as expected. Stress value and R-square is acceptable. And, change results after stimuli, manipulated Advertising show that AD makes DMB perception bent toward Cellular phone when Cellular phone-like AD is exposed, and that DMB positioning move towards Car-TV which is more personalized one when TV-like AD is exposed. It is true for both segment, A and B, consistently. Furthermore, the paper apply correspondence analysis to the same data and find almost the same results. The paper answers two main research questions. The first one is that perception about a new product is made mainly from prior experience. And the second one is that AD is effective in changing and enforcing perception. In addition to above, we extend perception change to purchase intention. Purchase intention is high when AD enforces original perception. AD that shows DMB like TV makes worst intention. This paper has limitations and issues to be pursed in near future. Methodologically, current methodology can't provide statistical test on the perceptual change, since classical MDS models, like Proxscal and correspondence analysis are not probability models. So, a new probability MDS model for testing hypothesis about configuration needs to be developed. Next, advertising message needs to be developed more rigorously from theoretical and managerial perspective. Also experimental procedure could be improved for more realistic data collection. For example, web-based experiment and real product stimuli and multimedia presentation could be employed. Or, one can display products together in simulated shop. In addition, demand and social desirability threats of internal validity could influence on the results. In order to handle the threats, results of the model-intended advertising and other "pseudo" advertising could be compared. Furthermore, one can try various level of innovativeness in order to check whether it make any different results (cf. Moon 2006). In addition, if one can create hypothetical product that is really innovative and new for research, it helps to make a vacant impression status and then to study how to form impression in more rigorous way.
The US supports the Information and Communication (IC) industry as a strategic one to wield a complete power over the World Market. However, several other countries are also eager to have the support for the IC industry because the industry produces a high added value and has a significant effect on other industries. Korea is not an exception. Korea recently succeeded in the commercialization of CDMA for the first time in the world, after the successful development of TDX. Hence, it is highly likely to get tracked by the US. Although the IC industry is a specific sector of IT, there is a concern that there might be a trade friction between the US and Korea due to a possible competition. It will be very important to prepare a solution in advance so that Korea could prevent the friction and at the same time increase its share domestically and globally. It will be our important task to solve the problem with the minimum cost if the conflict arises unfortunately in the IT area. The parties that have a strong influence on the US trade policy are the think tank group and the IT-related interest group. Therefore, it would be important to have a close relationship with them. We found some implications by analyzing the case of Japan, which has experienced trade frictions with the US over the long period of time in the high tech industry. In order to get rid of those conflicts with the US, the Japanese did the following things : (1) The Japanese government developed supporting theories and also resorted to international support so that the world could support the Japanese theories. (2) Through continual dialogue with the US business people, the Japanese business people sought after solutions to share profits among the Japanese and the US both in the domestic and in the worldwide markets. They focused on lobbying activities to influence the US public opinion to support the Japanese. The specific implementation plan was first to open culture lobby toward opinion leaders who were leaders about the US opinion. The institution, Japan Society, were formed to deliver a high quality lobbying activities. The second plan is economic lobby. They have established Japanese Economic Institute at Washington. They provide information about Japan regularly or irregularly to the US government, research institution, universities, etc., that are interested in Japan. The main objective behind these activities though is to advertise the validity of Japanese policy. Japanese top executives, practical interest groups on international trade, are trying to justify their position by direct contact with the US policy makers. The third one is political lobby. Japan is very careful about this political lobby. It is doing its best not to give impression that Japan is trying to shape the US policy making. It is collecting a vast amount of information to make a correct judgment on situation. It is not tilted toward one political party or the other, and is rather developing a long-term network of people who understand and support the Japanese policy. The following implications were drawn from the experience of Japan. First, the Korean government should develop a long-term plan and execute it to improve the Korean image perceived by American people. Second, the Korean government should begin public relation activities toward the US elite group. It is inevitable to make an effort to advertise Korea to this elite group because this group leads public opinion in the USA. Third, the Korean government needs the development of a relevant policy to elevate the positive atmosphere for advertising toward the US. For example, we need information about to whom and how to about lobbying activities, personnel network who immediately respond to wrong articles about Korea in the US press, and lastly the most recent data bank of Korean support group inside the USA. Fourth, the Korean government should create an atmosphere to facilitate the advertising toward the US. Examples include provision of incentives in tax on the expenses for the advertising toward the US and provision of rewards to those who significantly contribute to the advertising activities. Fifth, the Korean government should perform the role of a bridge between Korean and the US business people. Sixth, the government should promptly analyze the policy of IT industry, a strategic area, and timely distribute information to industries in Korea. Since the Korean government is the only institution that has formal contact with the US government, it is highly likely to provide information of a high quality. The followings are some implications for business institutions. First, Korean business organization should carefully analyze and observe the business policy and managerial conditions of US companies. It is very important to do so because all the trade frictions arise at the business level. Second, it is also very important that the top management of Korean firms contact the opinion leaders of the US. Third, it is critically needed that Korean business people sent to the USA do their part for PR activities. Fourth, it is very important to advertise to American employees in Korean companies. If we cannot convince our American employees, it would be a lot harder to convince regular American. Therefore, it is very important to make the American employees the support group for Korean ways. Fifth, it should try to get much information as early as possible about the US firms policy in the IT area. It should give an enormous effort on early collection of information because by doing so it has more time to respond. Sixth, it should research on the PR cases of foreign enterprise or non-American companies inside the USA. The research needs to identify the success factors and the failure factors. Finally, the business firm will get more valuable information if it analyzes and responds to, according to each medium.
Internet commerce has been growing at a rapid pace for the last decade. Many firms try to reach wider consumer markets by adding the Internet channel to the existing traditional channels. Despite the various benefits of the Internet channel, a significant number of firms failed in managing the new type of channel. Previous studies could not cleary explain these conflicting results associated with the Internet channel. One of the major reasons is most of the previous studies conducted analyses under a specific market condition and claimed that as the impact of Internet channel introduction. Therefore, their results are strongly influenced by the specific market settings. However, firms face various market conditions in the real worlddensity and disutility of using the Internet. The purpose of this study is to investigate the impact of various market environments on a firm's optimal channel strategy by employing a flexible game theory model. We capture various market conditions with consumer density and disutility of using the Internet. shows the channel structures analyzed in this study. Before the Internet channel is introduced, a monopoly manufacturer sells its products through an independent physical store. From this structure, the manufacturer could introduce its own Internet channel (MI). The independent physical store could also introduce its own Internet channel and coordinate it with the existing physical store (RI). An independent Internet retailer such as Amazon could enter this market (II). In this case, two types of independent retailers compete with each other. In this model, consumers are uniformly distributed on the two dimensional space. Consumer heterogeneity is captured by a consumer's geographical location (ci) and his disutility of using the Internet channel ( shows various market conditions captured by the two consumer heterogeneities. (a) illustrates a market with symmetric consumer distributions. The model captures explicitly the asymmetric distributions of consumer disutility in a market as well. In a market like that is represented in (c), the average consumer disutility of using an Internet store is relatively smaller than that of using a physical store. For example, this case represents the market in which 1) the product is suitable for Internet transactions (e.g., books) or 2) the level of E-Commerce readiness is high such as in Denmark or Finland. On the other hand, the average consumer disutility when using an Internet store is relatively greater than that of using a physical store in a market like summarizes the various scenarios of consumer distributions analyzed in this study. The range for disutility of using the Internet (
summarizes the analysis results. As the average travel cost in a market decreases while the average disutility of Internet use remains the same, average retail price, total quantity sold, physical store profit, monopoly manufacturer profit, and thus, total channel profit increase. On the other hand, the quantity sold through the Internet and the profit of the Internet store decrease with a decreasing average travel cost relative to the average disutility of Internet use. We find that a channel that has an advantage over the other kind of channel serves a larger portion of the market. In a market with a high average travel cost, in which the Internet store has a relative advantage over the physical store, for example, the Internet store becomes a mass-retailer serving a larger portion of the market. This result implies that the Internet becomes a more significant distribution channel in those markets characterized by greater geographical dispersion of buyers, or as consumers become more proficient in Internet usage. The results indicate that the degree of price discrimination also varies depending on the distribution of consumer disutility in a market. The manufacturer in a market in which the average travel cost is higher than the average disutility of using the Internet has a stronger incentive for price discrimination than the manufacturer in a market where the average travel cost is relatively lower. We also find that the manufacturer has a stronger incentive to maintain a high price level when the average travel cost in a market is relatively low. Additionally, the retail competition effect due to Internet channel introduction strengthens as average travel cost in a market decreases. This result indicates that a manufacturer's channel power relative to that of the independent physical retailer becomes stronger with a decreasing average travel cost. This implication is counter-intuitive, because it is widely believed that the negative impact of Internet channel introduction on a competing physical retailer is more significant in a market like Russia, where consumers are more geographically dispersed, than in a market like Hong Kong, that has a condensed geographic distribution of consumers.
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