Opaque selling vs traditional selling: optimal decisions for service providers in a competitive market
Asia Pacific Journal of Marketing and Logistics
ISSN: 1355-5855
Article publication date: 17 June 2022
Issue publication date: 4 April 2023
Abstract
Purpose
Opaque selling has become popular among service providers in recent years. Although many researchers have investigated the optimality of opaque selling for service providers focusing on heterogeneous consumers, one question remaining unexplored is how the service providers’ optimal decisions are impacted by competitive intensity in a heterogeneous market. This paper aims to determine the conditions under which opaque selling is optimal for competing service providers.
Design/methodology/approach
The paper takes a Hotelling model to characterize the competition between two service providers. The authors also consider the interaction between the service providers and intermediary. Service providers act as game leaders and determine whether they should cooperate with the intermediary to introduce the opaque service.
Findings
The authors find that two competing service providers do not always benefit from opaque selling in a heterogeneous market consisting of leisure and business consumers, and the competitive intensity plays a significant role in the service providers’ decision optimization. Opaque selling allows service providers to acquire more profit in a highly competitive market or when the market contains a large proportion of leisure consumers. Otherwise, it is optimal for service providers without introducing the opaque selling.
Practical implications
The paper examines the optimality of opaque selling for competing service providers, and provides the suggestions to optimize the service providers’ decisions.
Originality/value
The paper investigates how the service providers’ optimal decisions are impacted by competitive intensity, considering the interaction between the service providers and intermediary.
Keywords
Acknowledgements
This research is supported by the National Natural Science Foundation of China (72001066, 71991464, 71921001); Anhui Philosophy and Social Science Planning Project (AHSKQ2020D27); Anhui University Humanities and Sociology Science Research Project (SK2021A0504); Major Project of the National Social Science Fund of China (18ZDA064), and the Fundamental Research Funds for the Central Universities (WK2040000027).
Citation
Chen, T., Yang, F., Shan, F. and Xu, F. (2023), "Opaque selling vs traditional selling: optimal decisions for service providers in a competitive market", Asia Pacific Journal of Marketing and Logistics, Vol. 35 No. 4, pp. 980-996. https://doi.org/10.1108/APJML-09-2021-0697
Publisher
:Emerald Publishing Limited
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