The benefits of personalized pricing in a channel

Yunchuan Liu, Z. John Zhang

Research output: Contribution to journalArticlepeer-review


In this note, we explore channel interactions in an information-intensive environment where the retailer can implement personalized pricing and the manufacturer can leverage both personalized pricing and entry into a direct distribution channel. We study whether a retailer can benefit from personalized pricing and how upstream personalized pricing or entry into a direct distribution channel affects the allocation of channel profit. We find that the retailer is worse off because of its own or upstream personalized pricing, even when the retailer is a monopoly. However, it may still be optimal for the retailer to embrace personalized pricing in order to reap the strategic benefit of deterring the manufacturer from selling direct and targeting end consumers.

Original languageEnglish (US)
Pages (from-to)97-105
Number of pages9
JournalMarketing Science
Issue number1
StatePublished - Jan 2006
Externally publishedYes


  • CRM
  • Channel management
  • Entry deterrence
  • Personalized pricing

ASJC Scopus subject areas

  • Business and International Management
  • Marketing


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