Currently, Social Media, it has widely a renown keyword and its related social trends and businesses have been fastly applied into various contexts. Social media has become an important research area for scholars interested in online technologies and cyber space and their social impacts. Social media is not only including web-based services but also mobile-based application services that allow people to share various style information and knowledge through online connection. Social media users have tendency to common identity- and bond-attachment through interactions such as 'thumbs up', 'reply note', 'forwarding', which may have driven from various factors and may result in delivering information, sharing knowledge, and specific experiences et al. Even further, almost of all social media sites provide and connect unknown strangers depending on shared interests, political views, or enjoyable activities, and other stuffs incorporating the creation of contents, which provides benefits to users. As fast developing digital devices including smartphone, tablet PC, internet based blogging, and photo and video clips, scholars desperately have began to study regarding diverse issues connecting human beings' motivations and the behavioral results which may be articulated by the format of antecedents as well as consequences related to contents that people create via social media. Social media such as Facebook, Twitter, or Cyworld users are more and more getting close each other and build up their relationships by a different style. In this sense, people use social media as tools for maintain pre-existing network, creating new people socially, and at the same time, explicitly find some business opportunities using personal and unlimited public networks. In terms of theory in explaining this phenomenon, social capital is a concept that describes the benefits one receives from one's relationship with others. Thereby, social media use is closely related to the form and connected of people, which is a bridge that can be able to achieve informational benefits of a heterogeneous network of people and common identity- and bonding-attachment which emphasizes emotional benefits from community members or friend group. Social capital would be resources accumulated through the relationships among people, which can be considered as an investment in social relations with expected returns and may achieve benefits from the greater access to and use of resources embedded in social networks. Social media using for their social capital has vastly been adopted in a cyber world, however, there has been little explaining the phenomenon theoretically how people may take advantages or opportunities through interaction among people, why people may interactively give willingness to help or their answers. The individual consciously express themselves in an online space, so called, common identity- or bonding-attachments. Common-identity attachment is the focus of the weak ties, which are loose connections between individuals who may provide useful information or new perspectives for one another but typically not emotional support, whereas common-bonding attachment is explained that between individuals in tightly-knit, emotionally close relationship such as family and close friends. The common identify- and bonding-attachment are mainly studying on-offline setting, which individual convey an impression to others that are expressed to own interest to others. Thus, individuals expect to meet other people and are trying to behave self-presentation engaging in opposite partners accordingly. As developing social media, individuals are motivated to disclose self-disclosures of open and honest using diverse cues such as verbal and nonverbal and pictorial and video files to their friends as well as passing strangers. Social media context, common identity- and bond-attachment for self-presentation seems different compared with face-to-face context. In the realm of social media, social users look for self-impression by posting text messages, pictures, video files. Under the digital environments, people interact to work, shop, learn, entertain, and be played. Social media provides increasingly the kinds of intention and behavior in online. Typically, identity and bond social capital through self-presentation is the intentional and tangible component of identity. At social media, people try to engage in others via a desired impression, which can maintain through performing coherent and complementary communications including displaying signs, symbols, brands made of digital stuffs(information, interest, pictures, etc,). In marketing area, consumers traditionally show common-identity as they select clothes, hairstyles, automobiles, logos, and so on, to impress others in any given context in a shopping mall or opera. To examine these social capital and attachment, we combined a social capital theory with an attachment theory into our research model. Our research model focuses on the common identity- and bond-attachment how they are formulated through social capitals: cognitive capital, structural capital, relational capital, and individual characteristics. Thus, we examined that individual online kindness, self-rated expertise, and social relation influence to build common identity- and bond-attachment, and the attachment effects make an impact on both the willingness to help, however, common bond seems not to show directly impact on information sharing. As a result, we discover that the social capital and attachment theories are mainly applicable to the context of social media and usage in the individual networks. We collected sample data of 256 who are using social media such as Facebook, Twitter, and Cyworld and analyzed the suggested hypotheses through the Structural Equation Model by AMOS. This study analyzes the direct and indirect relationship between the social network service usage and outcomes. Antecedents of kindness, confidence of knowledge, social relations are significantly affected to the mediators common identity-and bond attachments, however, interestingly, network externality does not impact, which we assumed that a size of network was a negative because group members would not significantly contribute if the members do not intend to actively interact with each other. The mediating variables had a positive effect on toward willingness to help. Further, common identity attachment has stronger significant on shared information.
Journal of the Economic Geographical Society of Korea
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v.4
no.2
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pp.79-96
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2001
This paper introduces a new type of industrial cluster developed at the CBD of Seoul. Conventionally, clusters are said to be consisted of hi-tech, often If activities, manufacturing industries or artisan craft industries with increasing vertical integration and performance usually supported by venture capitals and favorable business infrastructure, not to mention governments', be it central or local, incentive plans. The study area, Cheonggyechon region has long been a traditional CBD frame of Seoul, Korea, being troubled by deterioration, traffic jams, and environmental degradation as most inner cities experience. Recently. this region has transformed to the most dynamic and productive area not by IT industries but by apparel and fashion activities. The study of the developmental trajectory and key characteristics for this kind of industrial cluster can give us insight both for the transition of inner city and for the cluster theory. This Paper firstly briefly Profiles the growth of the Cheonggyechon region over the past decade. It then shows the current spatial and business structure of the new industrial cluster, focusing on the fact that transactions costs are reduced, the creation and flow of information improves. and the local institutions are prone to be most responsive to the new cluster's specialized needs. The third section presents the key components of the customized production-distribution-shopping cluster development process, emphasizing the localized networking. social capital, spontaneous institutionalization of associational economic climate, and cultural economy based on place-specific inertia. The paper concludes with some comments about the prospects and perils of the new industrial cluster of Seoul.
The Journal of the Convergence on Culture Technology
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v.8
no.6
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pp.971-978
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2022
As a marketing method in a non-face-to-face society, the purpose of this study is to test how AR experience affects purchase intention in the process of consumers recognizing product information to purchase products and to secure the basis for the effectiveness of developing and introducing augmented reality functions in future product brand applications. Literary research methods and empirical research methods were used to verify the research purpose, and to measure this, an application of domestic tableware brand 'Odense', which implements augmented reality functions, was produced and used as an experimental tool. Also, a direct causal relationship was attempted by constituting a questionnaire by deriving a measurement scale for perceived usefulness, perceived ease, perceived pleasure, and purchase, which are factors of technology acceptance theory (TAM), and empirical analysis was conducted using the SPSS 25.0 statistical package to achieve the purpose of the study. As a result of the study, significant results were derived from all factors in the effect of perceived usefulness, ease, and pleasure on purchase intention, and several significant differences were found among factors according to gender, age, and internet shopping usage time in general characteristics. In conclusion, the user experience of the medium in which the augmented reality function is introduced in the information recognition stage of the product has a positive effect on purchase compared to the user experience of existing applications.
The Journal of Korean Academy of Sensory Integration
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v.6
no.1
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pp.47-62
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2008
Introduction : Sensory Integration(SI) theory, science it is developed by an occupational therapist A. Jean Ayres, is the one of the most popular frames of reference used in occupational therapy(OT) intervention. It has been proved as a scientific theory especially in neuroscience discipline through abundant research and practice. Occupational therapists apply the SI therapy with strong clinical reasoning to improve adaptive behaviors of their clients and try to link the adaptive behaviors with occupational performance in the clients' everyday life. One of the manners regarding clinical reasoning is Top-down approach. In occupational therapy discipline, Top-down approach is well-reflected within two evaluation tools; Canadian Occupational Performance Measure(COPM) and Assessment of Motor and Process Skills(AMPS) and two models of practice; Canadian Model of Occupational Performance(CMOP) and Occupational therapy intervention process model(OTIPM). Objective : The purpose of this paper demonstrates how SI therapy can be employed within OTIPM and how the OT process (evaluation-intervention-outcome) can be structuralized based on the Top-down approach. This single-case study recognizes the impact of a SI therapy for a male adolescent on his occupational performance. Intervention Examined : "P" was 16 years old male adolescent with no diagnosis and junior of the high school when he was referred. P was always with mouth opened, showed difficulties in gathering things need to be prepared and managing and paying money for shopping, and his colleges dislike getting close to him because he can't was his body well. AMPS was administrated in initial evaluation and reevaluation of P's occupation performance, Bruininks-Oserestky Test of Motor Proficiency-2(BOT-2) was carried out to assess motor functions and perception skills related in sensory integration, and occupational therapist performed clinical observation in order to complement the evaluation quantitatively and quantitatively. Based on the evaluation, it is concluded that the SI therapy is primary means to improve P's occupational performance, and three therapeutic approaches were constructed; restorative, acquired and compensatory approach. P showed improved motor and process skills in occupational performance after undergone the occupational therapy. Conclusions : The sensory integration therapy was practical enough to build the bridge between the occupational performance(Top) and the underlying component problems (Bottom). The OTIPM was helpful to identify meaningful occupation for P and P's family within P's contexts, and the AMPS was valuable to analyze and clarify the cause of difficulties in the chosen occupational performance.
One of the new roles of modern retail stores is to supply consumers with a memorable experience. In Korea, enhancing a store's environment so that customers remember a unique shopping experience is recognized as a sound strategy for strengthening the store's competitiveness. Motivated by this incentive, awareness of the experience-store concept is starting to increase in various categories of the retail industry. However, many experience stores, except in a few cases, have yet to derive a significant profit, explaining why Korean consumers are somewhat unfamiliar with, yet fascinated by, the experience stores that now exist in the country. Consumer satisfaction directly, and indirectly, affects a company's future profit and potential financial gain; customer satisfaction also affects loyalty. Therefore, knowing the significant factors that increase satisfaction and loyalty is essential for any company, in any field, to be able to effectively differentiate itself from the competition. Intrigued by increased competition opportunities, most Korean companies have adopted experience-store marketing strategies. When establishing the most effective processes for increasing sales and achieving a sustainable competitive advantage of a new concept, companies should consider certain factors that influence consumers' ability to accept new concepts and ideas. The Technology Acceptance Model (TAM) is a theory that models how people accept new concepts. TAM proposes the following two factors that influence a person's decisions about how, and when, he or she will use a new product: "perceived usefulness" and "perceived ease of use." Much of the existing research has suggested that a person's character also affects the process for accepting new ideas. Such personal character attributes as individual preferences, self-confidence, and a person's values, traits, and/or skills affect the process for willingly consenting to try something new. It will be meaningful to establish how the TAM theory's components, as well as personal character, affect individuals accepting the experience-store concept. To that end, as it pertains to an experience store, the first goal of the study is to examine the influence of innovative factors (perceived usefulness and perceived ease of use) on satisfaction and loyalty. The second objective is to define the moderate effect of consumers' personal characteristics on the model. The proposed model was tested on 149 respondents who were engaged in leisure sports activities and bought sports outdoor garments and equipment. According to the study's findings, the satisfaction and loyalty of an experience store can be explained by perceived usefulness and perceived ease of use, with the study's results demonstrating the stronger of the two factors being "perceived ease of use." The study failed to explain the effects of a person's character on the model. In conclusion, when the companies that operate the experience stores execute their marketing and promotion strategies, they should stress the stores' "ease of use" product components. Additionally, it can be extrapolated from the study data that since the experience-store idea is still relatively unfamiliar to Korean consumers, most customers are not yet able to evaluate, nor take a position regarding, their respective attitudes toward experience stores.
In his highly cited book, Innovator's Dilemma (1997), Christensen introduced a notion of disruptive technology that is based on the observations from disk-drive industry and used it as an explanatory variable through which new entrants outperform incumbents in the industry. In explaining his later observations of disruptive innovations in other industries, however, his early theory based on disruptive technology has been applied to all cases without careful distinction between the notions of technology and business model (Markides, 2006). Furthermore, it has been criticized that his model suffers from lack of enough explanatory power and other important factors that are necessary to fully explain the observed phenomena in various cases (Danneels, 2004). Motivated by the critics in literature, the current study carefully distinguishes between innovation of technology and innovation of business model in the process of disruptive innovation, and apply our framework to the case of internet shopping mall business. Our study yields two main results. First, the internet-related business model which Christensen argued as an example of disruptive innovation is accomplished through two distinctive and separable growth phases: a period of technology growth and a period of business model growth. Second, in the process of disruptive innovation, the notion of enabling technology plays an important bridging role that connects core technology and business model. Furthermore, we confirm that the success of business model innovation depends on the degree of maturity of the enabling technologies. In conclusion, Christensen's notion of disruptive innovation can be further detailed in terms of technology innovation and business model innovation, and if there exist enabling technologies, the chance of success of the business model is higher when the enabling technology is matured rather than when the core technology is merely acknowledged as a disruptive technology.
I conducted empirical analyses of what happens when an offline channel expands to an online channel and whether the pre-existing offline channel's competitive assets (e.g. brand reputation and level of service satisfaction) can be linked to online channel preference. I found that an offline channel's brand reputation and level of service satisfaction can have a direct influence on offline channel preference and a second-hand influence on online channel preference. Thus, if the competitiveness of the online channel is strong enough and its customers have a higher preference for the offline channel, they will be committed and loyal to the company. The resultant enhanced competitiveness of the offline channel will present opportunities for both present and future success. The main results are the following. First, the management of the distribution channel service quality is more important than that of the brand reputation. Customers' experiences of service and subjective evaluations are not important only as the leading factors in the long-term brand reputation management but also as influential factors in channel preference. SoThus, given that the service quality of the pre-existing channel is not the customers' main concern, a strategy of improving the level of service satisfaction aimed at present customers is more valuable than a wide brand positioning strategy aimed at general and new customers. Second, when an offline channel company establishes an internet shopping mall on an online channel, it is highly likely that the preference and subjective evaluation of the present customers will influence the online channel. This applies not only to the special case of an expansion from an offline intermediary channel to an online one, but also to an online channel acting as an expansion of the business model of a conventional manufacturing or service company: both cases are vertical integrations of marketing channels in an expansion of the distribution channel. My theory applies to a wide range of contexts. Third and finally, any business strategy can grasp the meaning of 'channel expansion. Fundamentally, it is an expansion of the sales activity channel and marketing activity. However, it is also a way of enhancing marketing and sales competitiveness through an expansion to an online or offline channel. The expansion of an offline company to an online channel could be seen not as improvement but as an innovation of the business process by which two goals are achieved with one technique. The former is expected to increase the sales of the offline company, and the latter is also expected to increase sales while also contributing to cost reduction.
In terms of element and process, art today has already been fully systemized, yet tends to become even more systemized. All phases of creation and exhibition, appreciation and education, promotion and marketing are planned, adjusted, and decided within the order of a globalized, networked system. Each phase is executed, depending on the system of management and control and diverse means corresponding to the system. From the step of education, artists are guided to determine their styles and not be motivated by their desire to become star artists or running counter to mainstream tendency and fashion. In the process of planning an exhibition, the level of artist awareness is considered more significant than work quality. It is impossible to avoid such systems and institutions today. No one can escape or be freed from the influence of such system. This discussion addresses a serious distortion in the selection system as part of the system connotatively called "art museum system," especially to evaluate artistic achievement and aesthetic quality. Called "studio system" or "art star system," the system distinguishes successful minority from failed absolute majority and justifies the results, deciding discriminative compensations. The discussion begins from work by Hunter Jonakin and Dan Perjovschi. The key point of this discussion is not their art worlds but the shared truth referred by the two as the collusive "art market" and "art star system." Through works based on their experiences, the two artists refer to these systems which restrict and confine them. Jonakin's Jeff Koons Must Die! is avideo game conveying a critical comment on authoritative operation of the museum system and star system. In this work, participants, whether viewer or artist, are destined to lose: the game is unwinnable. Players take the role of a person locked in a museum where artist Jeff Koons' retrospective is held. The player can either look around and quietly observe the works, which causes a game-over, or he can blow the classical paintings to pieces and cause the artist Koons to come out and reprimand the player, also resulting in a game-over. Like Jonakin, Dan Perjovschi's some drawings also focuses on the status of the artist shrunken by the system. Most artists are ruined in a process of competition to survive within the museum system. As John Burger properly pointed out, out of the art systems today, public collections (art museums) and private collections have become "something unbearable." The system justifies the selection system of art stars and its frame of reference, disregarding the problem of producing numerable victims in its process. What should be underlined above all else is that the present selection system seriously shrinks art's creative function and its function of generating meaning. In this situation, art might fall to the level of entertainment, accessible to more people and compromising with popularity. This discussion is based on assumption and consciousness on the matter that this situation might cause catastrophic results for not only explicit victims of the system but also winners, or ones defined as winners. The system of art is probably possible only by desire or distortion stemmed from such desire. The system can be flourished only under the economic system of avarice: quantitatively expanding economy, abundant style, resort economy in Venice and Miami, and luxurious shopping malls with up-to-date facilities. The catastrophe here is ongoing, not a sudden emergence, and dynamic, leading the system itself to a devastating end.
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 (${\delta}_{N_i}$).
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 (b). Countries like Ukraine and Bulgaria, or the market for "experience goods" such as shoes, could be examples of this market condition.
summarizes the various scenarios of consumer distributions analyzed in this study. The range for disutility of using the Internet (${\delta}_{N_i}$) is held constant, while the range of consumer distribution (${\chi}_i$) varies from -25 to 25, from -50 to 50, from -100 to 100, from -150 to 150, and from -200 to 200.
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. illustrates how this happens. When mangers consider the overall impact of the Internet channel, however, they should consider not only channel power, but also sales volume. When both are considered, the introduction of the Internet channel is revealed as more harmful to a physical retailer in Russia than one in Hong Kong, because the sales volume decrease for a physical store due to Internet channel competition is much greater in Russia than in Hong Kong. The results show that manufacturer is always better off with any type of Internet store introduction. The independent physical store benefits from opening its own Internet store when the average travel cost is higher relative to the disutility of using the Internet. Under an opposite market condition, however, the independent physical retailer could be worse off when it opens its own Internet outlet and coordinates both outlets (RI). This is because the low average travel cost significantly reduces the channel power of the independent physical retailer, further aggravating the already weak channel power caused by myopic inter-channel price coordination. The results implies that channel members and policy makers should explicitly consider the factors determining the relative distributions of both kinds of consumer disutility, when they make a channel decision involving an Internet channel. These factors include the suitability of a product for Internet shopping, the level of E-Commerce readiness of a market, and the degree of geographic dispersion of consumers in a market. Despite the academic contributions and managerial implications, this study is limited in the following ways. First, a series of numerical analyses were conducted to derive equilibrium solutions due to the complex forms of demand functions. In the process, we set up V=100, ${\lambda}$=1, and ${\beta}$=0.01. Future research may change this parameter value set to check the generalizability of this study. Second, the five different scenarios for market conditions were analyzed. Future research could try different sets of parameter ranges. Finally, the model setting allows only one monopoly manufacturer in the market. Accommodating competing multiple manufacturers (brands) would generate more realistic results.
The Census Bureau of the Department of Commerce announced in May 2008 that U.S. retail e-commerce sales for 2006 reached $ 107 billion, up from $ 87 billion in 2005 - an increase of 22 percent. From 2001 to 2006, retail e-sales increased at an average annual growth rate of 25.4 percent. The explosive growth of E-Commerce has caused profound changes in marketing channel relationships and structures in many industries. Despite the great potential implications for both academicians and practitioners, there still exists a great deal of uncertainty about the impact of the Internet channel introduction on distribution channel management. The purpose of this study is to investigate how the ownership of the new Internet channel affects the existing channel members and consumers. To explore the above research questions, this study conducts well-controlled mathematical experiments to isolate the impact of the Internet channel by comparing before and after the Internet channel entry. The model consists of a monopolist manufacturer selling its product through a channel system including one independent physical store before the entry of an Internet store. The addition of the Internet store to this channel system results in a mixed channel comprised of two different types of channels. The new Internet store can be launched by the independent physical store such as Bestbuy. In this case, the physical retailer coordinates the two types of stores to maximize the joint profits from the two stores. The Internet store also can be introduced by an independent Internet retailer such as Amazon. In this case, a retail level competition occurs between the two types of stores. Although the manufacturer sells only one product, consumers view each product-outlet pair as a unique offering. Thus, the introduction of the Internet channel provides two product offerings for consumers. The channel structures analyzed in this study are illustrated in Fig.1. It is assumed that the manufacturer plays as a Stackelberg leader maximizing its own profits with the foresight of the independent retailer's optimal responses as typically assumed in previous analytical channel studies. As a Stackelberg follower, the independent physical retailer or independent Internet retailer maximizes its own profits, conditional on the manufacturer's wholesale price. The price competition between two the independent retailers is assumed to be a Bertrand Nash game. For simplicity, the marginal cost is set at zero, as typically assumed in this type of study. In order to explore the research questions above, this study develops a game theoretic model that possesses the following three key characteristics. First, the model explicitly captures the fact that an Internet channel and a physical store exist in two independent dimensions (one in physical space and the other in cyber space). This enables this model to demonstrate that the effect of adding an Internet store is different from that of adding another physical store. Second, the model reflects the fact that consumers are heterogeneous in their preferences for using a physical store and for using an Internet channel. Third, the model captures the vertical strategic interactions between an upstream manufacturer and a downstream retailer, making it possible to analyze the channel structure issues discussed in this paper. Although numerous previous models capture this vertical dimension of marketing channels, none simultaneously incorporates the three characteristics reflected in this model. The analysis results are summarized in Table 1. When the new Internet channel is introduced by the existing physical retailer and the retailer coordinates both types of stores to maximize the joint profits from the both stores, retail prices increase due to a combination of the coordination of the retail prices and the wider market coverage. The quantity sold does not significantly increase despite the wider market coverage, because the excessively high retail prices alleviate the market coverage effect to a degree. Interestingly, the coordinated total retail profits are lower than the combined retail profits of two competing independent retailers. This implies that when a physical retailer opens an Internet channel, the retailers could be better off managing the two channels separately rather than coordinating them, unless they have the foresight of the manufacturer's pricing behavior. It is also found that the introduction of an Internet channel affects the power balance of the channel. The retail competition is strong when an independent Internet store joins a channel with an independent physical retailer. This implies that each retailer in this structure has weak channel power. Due to intense retail competition, the manufacturer uses its channel power to increase its wholesale price to extract more profits from the total channel profit. However, the retailers cannot increase retail prices accordingly because of the intense retail level competition, leading to lower channel power. In this case, consumer welfare increases due to the wider market coverage and lower retail prices caused by the retail competition. The model employed for this study is not designed to capture all the characteristics of the Internet channel. The theoretical model in this study can also be applied for any stores that are not geographically constrained such as TV home shopping or catalog sales via mail. The reasons the model in this study is names as "Internet" are as follows: first, the most representative example of the stores that are not geographically constrained is the Internet. Second, catalog sales usually determine the target markets using the pre-specified mailing lists. In this aspect, the model used in this study is closer to the Internet than catalog sales. However, it would be a desirable future research direction to mathematically and theoretically distinguish the core differences among the stores that are not geographically constrained. The model is simplified by a set of assumptions to obtain mathematical traceability. First, this study assumes the price is the only strategic tool for competition. In the real world, however, various marketing variables can be used for competition. Therefore, a more realistic model can be designed if a model incorporates other various marketing variables such as service levels or operation costs. Second, this study assumes the market with one monopoly manufacturer. Therefore, the results from this study should be carefully interpreted considering this limitation. Future research could extend this limitation by introducing manufacturer level competition. Finally, some of the results are drawn from the assumption that the monopoly manufacturer is the Stackelberg leader. Although this is a standard assumption among game theoretic studies of this kind, we could gain deeper understanding and generalize our findings beyond this assumption if the model is analyzed by different game rules.
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