The purpose of this study is to investigate the relation between social education and secondary education of seaside and sea village schools for supporting the successors to fishery. Objects of the study were five groups; 321 fishermen, 107 staff members of a Fishery Guidance Center, 1, 001 students, 306 teachers of sea villages, 193 staff members of a Fishery Cooperative Association. The total number of people being object of this study was 1, 876 persons. The questionaire used for this study was made after preliminary counseling with fishermen in sea villages and teachers in seaside schools. The results of this study are as follow ; 1) About the value of Fishery and successors to Fishery There have been more positive responses than negative ones to the question on the value of fishery. The main reason for positive responses lies in the potentiality for development of fishery but the negative responses are because of the heavy work. 56.8% of the respondents expected an increasing number of successor to fishery, but 43.2% of the respondents had a negative foresight on that problem. The negative respondents stated that the fisherman that moved from the sea villages to the urban areas are responsible for the none increasing numbers of successors to fishery. Most of the respondents answered that government support is needed in order to increase the number of successors to fishery. 2) Social education for Fishermen Only 40% of fishermen know the Fishing Village Guidance Center as the main institute for social education. 94.17% of the respondents prefer plural institutes to single ones. 5.9% of the respondents answered with opposit opinions. 40.4% of the respondents answered that technical teachings has not often been practised. The reason why technical teaching does not often come into effect are as follows; lack of technical expertise, insufficient concern of staff members of the Guidance Center or the Cooperation Association. Also fishermen answered that the Fisherman Guidance Center does not often practise technical education. The Fishery Cooperation Association with its social education for fisherman takes the role of education for the economical way and carries out financial assistance. The relationship between the Fishery Cooperative Association and fishermen is presented satisfactory. However, the frequency of education is not satisfactory. Indifferences between staff members of the Fishery Cooperative Association does not carry out fishery education very often. Also loaned money matters were not satisfactory. 3) Secondary education for Fishery This study showed that it is desirable that the practical course of middle schools in islets and seaside villages take education on fishery ; however, a few schools only take the practical course fishery. Most of the fishery high schools want computer education as a new recommendable course. The students of fishery high schools want computer education as a new recommendable course. The students of fishery high schools have problems with scientific terms in the text books for the practical of fishery high schools have problems with scientific terms in the text books for the practical courses. Over 80% of the respondents agreed that the principals of schools in islets and sea side villages should be men having majored in fishery. 4) The connection between social education and secondary education for fishery a. It is desirable that the principal and vice principal of secondary schools in islets and sea side villages are men majored in fishery. b. It is recommendable that fishery courses are taken as practical courses in fishery village schools for it is helpful to relate between the vocation and the district's special character, as well as to built up relation between the middle school education and the fishery high school education. c. The teachers of fishery high schools and the officials of government offices which are related to fishery should work together to realize a program on teaching various kinds of techniques and give other useful informations to fishermen. d. During the vacations the fishery high school could be used for the social education of fishermen. Seminars on fishery technique and cultural aspects could be held. Especially a spiritual education which is needed for the improvement of the society of fishermen could be achieved by a cultural education. e. On the state level a financial support to raise the number of successors to fishery, a national policy for the betterment of the life of fishermen, as well as active publicity activities are necessary. f. A financial support of the government for raising the number of the successors to fishery is needed. For this purpose a fishery education performed on a state level would be desirable.
Proceedings of the Korean DIstribution Association Conference
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2001.11b
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pp.125-141
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2001
In this paper, the current problems of logistics industry in Korea and their possible solutions were discussed. With Korea Telecoms KT-Logis, the supplier and demander of logistics service would not have to invest large sum of money into their computer system. All they need is just a computer with internet connected. What KT-Logis influence on the logistics industry are the following; 1. Many logistics service supplier and demander can do the business on the web with one computer system. 2. This web based computer system does not only work on the office but also apply on the field worker such as delivery personnel or even the forwarder with mobile phone. 3. KT-Logis is an integrated system which cover the broad arrange of logistics management from truck management to customer relations management. 4. Finally, KT-Logis is web based systems which suits for current e-business and mobile environment. In future, more studies should be done to develop more progressive integrated logistics information systems with enterprise resource planning(ERP) and supply chain management(SCM).
This paper focuses on two recent legislative developments in electronic commerce: the "Uniform Computer Information Transactions Act" ("UCITA") of USA and the "preliminary draft convention on the use of data message in [international trade] [the context of international contracts]" ("preliminary draft Convention") of UNCITRAL. UCITA provides rules contracts for computer information transactions. UCITA supplies modified contract formation rules adapted to permit and to facilitate electronic contracting. UCITA also adjusts commonly recognized warranties as appropriate for computer information transactions; for example, to recognize the international context in connection with protection against infringement and misappropriation, and First Amendment considerations involved with informational content. Furthermore, UCITA adapts traditional rules as to what is acceptable performance to the context of computer information transactions, including providing rules for the protection of the parties concerning the electronic regulation of performance to clarify that the appropriate general rule is one of material breach with respect to cancellation (rather than so-called perfect tender). UCITA also supplies guidance in the case of certain specialized types of contracts, e.g., access contracts and for termination of contracts. While for the most part carrying over the familiar rules of Article 2 concerning breach when appropriate in the context of the tangible medium on which the information is fixed, but also adapting common law rules and rules from Article 2 on waiver, cure, assurance and anticipatory breach to the context of computer information transactions, UCITA provides a remedy structure somewhat modeled on that of Article 2 but adapted in significant respects to the different context of a computer information transaction. For example, UCITA contains very important limitations on the generally recognized common law right of self-help as applicable in the electronic context. The UNCITRAL's preliminary draft Convention applies to the use of data messages in connection with an existing or contemplated contract between parties whose places of business are in different States. Nothing in the Convention affects the application of any rule of law that may require the parties to disclose their identities, places of business or other information, or relieves a party from the legal consequences of making inaccurate or false statements in that regard. Likewise, nothing in the Convention requires a contract or any other communication, declaration, demand, notice or request that the parties are required to make or choose to make in connection with an existing or contemplated contract to be made or evidenced in any particular form. Under the Convention, a communication, declaration, demand, notice or request that the parties are required to make or choose to make in connection with an existing or contemplated contract, including an offer and the acceptance of an offer, is conveyed by means of data messages. Also, the Convention provides for use of automated information systems for contract formation: a contract formed by the interaction of an automated information system and a person, or by the interaction of automated information systems, shall not be denied on the sole ground that no person reviewed each of the individual actions carried out by such systems or the resulting agreement. Further, the Convention provides that, unless otherwise agreed by the parties, a contract concluded by a person that accesses an automated information system of another party has no legal effect and is not enforceable if the person made an error in a data message and (a) the automated information system did not provide the person with an opportunity to prevent or correct the error; (b) the person notifies the other party of the error as soon as practicable when the person making the error learns of it and indicates that he or she made an error in the data message; (c) The person takes reasonable steps, including steps that conform to the other party's instructions, to return the goods or services received, if any, as a result of the error or, if instructed to do so, to destroy such goods or services.
Internet-based commerce has undergone an explosive growth over the past decade as consumers today find it more economical as well as more convenient to shop online. Nevertheless, the shift in the common mode of shopping from offline to online commerce has caused consumers to have worries over such issues as private information leakage, online fraud, discrepancy in product quality and grade, unsuccessful delivery, and so forth, Numerous studies have been undertaken to examine the role of perceived risk as a chief barrier to online purchases and to understand the theoretical relationships among perceived risk, trust and purchase intentions, However, most studies focus on empirically investigating the effects of trust on perceived risk, with little attention devoted to the effects of perceived risk on trust, While the influence trust has on perceived risk is worth studying, the influence in the opposite direction is equally important, enabling insights into the potential of perceived risk as a prohibitor of trust, According to Pavlou (2003), the primary source of the perceived risk is either the technological uncertainty of the Internet environment or the behavioral uncertainty of the transaction partner. Due to such types of uncertainty, an increase in the worries over the perceived risk may negatively affect trust, For example, if a consumer who sends sensitive transaction data over Internet is concerned that his or her private information may leak out because of the lack of security, trust may decrease (Olivero and Lunt, 2004), By the same token, if the consumer feels that the online merchant has the potential to profit by behaving in an opportunistic manner taking advantage of the remote, impersonal nature of online commerce, then it is unlikely that the merchant will be trusted, That is, the more the probable danger is likely to occur, the less trust and the greater need to control the transaction (Olivero and Lunt, 2004), In summary, a review of the related studies indicates that while some researchers looked at the influence of overall perceived risk on trust level, not much attention has been given to the effects of different types of perceived risk, In this context the present research aims at addressing the need to study how trust is affected by different types of perceived risk, We classified perceived risk into six different types based on the literature, and empirically analyzed the impact of each type of perceived risk upon consumer trust in an online merchant and further its impact upon purchase intentions. To meet our research objectives, we developed a conceptual model depicting the nomological structure of the relationships among our research variables, and also formulated a total of seven hypotheses. The model and hypotheses were tested using an empirical analysis based on a questionnaire survey of 206 college students. The reliability was evaluated via Cronbach's alphas, the minimum of which was found to be 0.73, and therefore the questionnaire items are all deemed reliable. In addition, the results of confirmatory factor analysis (CFA) designed to check the validity of the measurement model indicate that the convergent, discriminate, and nomological validities of the model are all acceptable. The structural equation modeling analysis to test the hypotheses yielded the following results. Of the first six hypotheses (H1-1 through H1-6) designed to examine the relationships between each risk type and trust, three hypotheses including H1-1 (performance risk ${\rightarrow}$ trust), H1-2 (psychological risk ${\rightarrow}$ trust) and H1-5 (online payment risk ${\rightarrow}$ trust) were supported with path coefficients of -0.30, -0.27 and -0.16 respectively. Finally, H2 (trust ${\rightarrow}$ purchase intentions) was supported with relatively high path coefficients of 0.73. Results of the empirical study offer the following findings and implications. First. it was found that it was performance risk, psychological risk and online payment risk that have a statistically significant influence upon consumer trust in an online merchant. It implies that a consumer may find an online merchant untrustworthy if either the product quality or the product grade does not match his or her expectations. For that reason, online merchants including digital storefronts and e-marketplaces are suggested to pursue a strategy focusing on identifying the target customers and offering products that they feel best meet performance and psychological needs of those customers. Thus, they should do their best to make it widely known that their products are of as good quality and grade as those purchased from offline department stores. In addition, it may be inferred that today's online consumers remain concerned about the security of the online commerce environment due to the repeated occurrences of hacking or private information leakage. Online merchants should take steps to remove potential vulnerabilities and provide online notices to emphasize that their website is secure. Second, consumer's overall trust was found to have a statistically significant influence on purchase intentions. This finding, which is consistent with the results of numerous prior studies, suggests that increased sales will become a reality only with enhanced consumer trust.
1. Introduction Today Internet is recognized as an important way for the transaction of products and services. According to the data surveyed by the National Statistical Office, the on-line transaction in 2007 for a year, 15.7656 trillion, shows a 17.1%(2.3060 trillion won) increase over last year, of these, the amount of B2C has been increased 12.0%(10.2258 trillion won). Like this, because the entry barrier of on-line market of Korea is low, many retailers could easily enter into the market. So the bigger its scale is, but on the other hand, the tougher its competition is. Particularly due to the Internet and innovation of IT, the existing market has been changed into the perfect competitive market(Srinivasan, Rolph & Kishore, 2002). In the early years of on-line business, they think that the main reason for success is a moderate price, they are awakened to its importance of on-line service quality with tough competition. If it's not sure whether customers can be provided with what they want, they can use the Web sites, perhaps they can trust their products that had been already bought or not, they have a doubt its viability(Parasuraman, Zeithaml & Malhotra, 2005). Customers can directly reserve and issue their air tickets irrespective of place and time at the Web sites of travel agencies or airlines, but its empirical studies about these Web sites for reserving and issuing air tickets are insufficient. Therefore this study goes on for following specific objects. First object is to measure service quality and service recovery of Web sites for reserving and issuing air tickets. Second is to look into whether above on-line service quality and on-line service recovery have an impact on overall service quality. Third is to seek for the relation with overall service quality and customer satisfaction, then this customer satisfaction and loyalty intention. 2. Theoretical Background 2.1 On-line Service Quality Barnes & Vidgen(2000; 2001a; 2001b; 2002) had invented the tool to measure Web sites' quality four times(called WebQual). The WebQual 1.0, Step one invented a measuring item for information quality based on QFD, and this had been verified by students of UK business school. The Web Qual 2.0, Step two invented for interaction quality, and had been judged by customers of on-line bookshop. The WebQual 3.0, Step three invented by consolidating the WebQual 1.0 for information quality and the WebQual2.0 for interactionquality. It includes 3-quality-dimension, information quality, interaction quality, site design, and had been assessed and confirmed by auction sites(e-bay, Amazon, QXL). Furtheron, through the former empirical studies, the authors changed sites quality into usability by judging that usability is a concept how customers interact with or perceive Web sites and It is used widely for accessing Web sites. By this process, WebQual 4.0 was invented, and is consist of 3-quality-dimension; information quality, interaction quality, usability, 22 items. However, because WebQual 4.0 is focusing on technical part, it's usable at the Website's design part, on the other hand, it's not usable at the Web site's pleasant experience part. Parasuraman, Zeithaml & Malhorta(2002; 2005) had invented the measure for measuring on-line service quality in 2002 and 2005. The study in 2002 divided on-line service quality into 5 dimensions. But these were not well-organized, so there needed to be studied again totally. So Parasuraman, Zeithaml & Malhorta(2005) re-worked out the study about on-line service quality measure base on 2002's study and invented E-S-QUAL. After they invented preliminary measure for on-line service quality, they made up a question for customers who had purchased at amazon.com and walmart.com and reassessed this measure. And they perfected an invention of E-S-QUAL consists of 4 dimensions, 22 items of efficiency, system availability, fulfillment, privacy. Efficiency measures assess to sites and usability and others, system availability measures accurate technical function of sites and others, fulfillment measures promptness of delivering products and sufficient goods and others and privacy measures the degree of protection of data about their customers and so on. 2.2 Service Recovery Service industries tend to minimize the losses by coping with service failure promptly. This responses of service providers to service failure mean service recovery(Kelly & Davis, 1994). Bitner(1990) went on his study from customers' view about service providers' behavior for customers to recognize their satisfaction/dissatisfaction at service point. According to them, to manage service failure successfully, exact recognition of service problem, an apology, sufficient description about service failure and some tangible compensation are important. Parasuraman, Zeithaml & Malhorta(2005) approached the service recovery from how to measure, rather than how to manage, and moved to on-line market not to off-line, then invented E-RecS-QUAL which is a measuring tool about on-line service recovery. 2.3 Customer Satisfaction The definition of customer satisfaction can be divided into two points of view. First, they approached customer satisfaction from outcome of comsumer. Howard & Sheth(1969) defined satisfaction as 'a cognitive condition feeling being rewarded properly or improperly for their sacrifice.' and Westbrook & Reilly(1983) also defined customer satisfaction/dissatisfaction as 'a psychological reaction to the behavior pattern of shopping and purchasing, the display condition of retail store, outcome of purchased goods and service as well as whole market.' Second, they approached customer satisfaction from process. Engel & Blackwell(1982) defined satisfaction as 'an assessment of a consistency in chosen alternative proposal and their belief they had with them.' Tse & Wilton(1988) defined customer satisfaction as 'a customers' reaction to discordance between advance expectation and ex post facto outcome.' That is, this point of view that customer satisfaction is process is the important factor that comparing and assessing process what they expect and outcome of consumer. Unlike outcome-oriented approach, process-oriented approach has many advantages. As process-oriented approach deals with customers' whole expenditure experience, it checks up main process by measuring one by one each factor which is essential role at each step. And this approach enables us to check perceptual/psychological process formed customer satisfaction. Because of these advantages, now many studies are adopting this process-oriented approach(Yi, 1995). 2.4 Loyalty Intention Loyalty has been studied by dividing into behavioral approaches, attitudinal approaches and complex approaches(Dekimpe et al., 1997). In the early years of study, they defined loyalty focusing on behavioral concept, behavioral approaches regard customer loyalty as "a tendency to purchase periodically within a certain period of time at specific retail store." But the loyalty of behavioral approaches focuses on only outcome of customer behavior, so there are someone to point the limits that customers' decision-making situation or process were neglected(Enis & Paul, 1970; Raj, 1982; Lee, 2002). So the attitudinal approaches were suggested. The attitudinal approaches consider loyalty contains all the cognitive, emotional, voluntary factors(Oliver, 1997), define the customer loyalty as "friendly behaviors for specific retail stores." However these attitudinal approaches can explain that how the customer loyalty form and change, but cannot say positively whether it is moved to real purchasing in the future or not. This is a kind of shortcoming(Oh, 1995). 3. Research Design 3.1 Research Model Based on the objects of this study, the research model derived is
. 3.2 Hypotheses 3.2.1 The Hypothesis of On-line Service Quality and Overall Service Quality The relation between on-line service quality and overall service quality I-1. Efficiency of on-line service quality may have a significant effect on overall service quality. I-2. System availability of on-line service quality may have a significant effect on overall service quality. I-3. Fulfillment of on-line service quality may have a significant effect on overall service quality. I-4. Privacy of on-line service quality may have a significant effect on overall service quality. 3.2.2 The Hypothesis of On-line Service Recovery and Overall Service Quality The relation between on-line service recovery and overall service quality II-1. Responsiveness of on-line service recovery may have a significant effect on overall service quality. II-2. Compensation of on-line service recovery may have a significant effect on overall service quality. II-3. Contact of on-line service recovery may have a significant effect on overall service quality. 3.2.3 The Hypothesis of Overall Service Quality and Customer Satisfaction The relation between overall service quality and customer satisfaction III-1. Overall service quality may have a significant effect on customer satisfaction. 3.2.4 The Hypothesis of Customer Satisfaction and Loyalty Intention The relation between customer satisfaction and loyalty intention IV-1. Customer satisfaction may have a significant effect on loyalty intention. 3.2.5 The Hypothesis of a Mediation Variable Wolfinbarger & Gilly(2003) and Parasuraman, Zeithaml & Malhotra(2005) had made clear that each dimension of service quality has a significant effect on overall service quality. Add to this, the authors analyzed empirically that each dimension of on-line service quality has a positive effect on customer satisfaction. With that viewpoint, this study would examine if overall service quality mediates between on-line service quality and each dimension of customer satisfaction, keeping on looking into the relation between on-line service quality and overall service quality, overall service quality and customer satisfaction. And as this study understands that each dimension of on-line service recovery also has an effect on overall service quality, this would examine if overall service quality also mediates between on-line service recovery and each dimension of customer satisfaction. Therefore these hypotheses followed are set up to examine if overall service quality plays its role as the mediation variable. The relation between on-line service quality and customer satisfaction V-1. Overall service quality may mediate the effects of efficiency of on-line service quality on customer satisfaction. V-2. Overall service quality may mediate the effects of system availability of on-line service quality on customer satisfaction. V-3. Overall service quality may mediate the effects of fulfillment of on-line service quality on customer satisfaction. V-4. Overall service quality may mediate the effects of privacy of on-line service quality on customer satisfaction. The relation between on-line service recovery and customer satisfaction VI-1. Overall service quality may mediate the effects of responsiveness of on-line service recovery on customer satisfaction. VI-2. Overall service quality may mediate the effects of compensation of on-line service recovery on customer satisfaction. VI-3. Overall service quality may mediate the effects of contact of on-line service recovery on customer satisfaction. 4. Empirical Analysis 4.1 Research design and the characters of data This empirical study aimed at customers who ever purchased air ticket at the Web sites for reservation and issue. Total 430 questionnaires were distributed, and 400 were collected. After surveying with the final questionnaire, the frequency test was performed about variables of sex, age which is demographic factors for analyzing general characters of sample data. Sex of data is consist of 146 of male(42.7%) and 196 of female(57.3%), so portion of female is a little higher. Age is composed of 11 of 10s(3.2%), 199 of 20s(58.2%), 105 of 30s(30.7%), 22 of 40s(6.4%), 5 of 50s(1.5%). The reason that portions of 20s and 30s are higher can be supposed that they use the Internet frequently and purchase air ticket directly. 4.2 Assessment of measuring scales This study used the internal consistency analysis to measure reliability, and then used the Cronbach'$\alpha$ to assess this. As a result of reliability test, Cronbach'$\alpha$ value of every component shows more than 0.6, it is found that reliance of the measured variables are ensured. After reliability test, the explorative factor analysis was performed. the factor sampling was performed by the Principal Component Analysis(PCA), the factor rotation was performed by the Varimax which is good for verifying mutual independence between factors. By the result of the initial factor analysis, items blocking construct validity were removed, and the result of the final factor analysis performed for verifying construct validity is followed above. 4.3 Hypothesis Testing 4.3.1 Hypothesis Testing by the Regression Analysis(SPSS) 4.3.2 Analysis of Mediation Effect To verify mediation effect of overall service quality of and , this study used the phased analysis method proposed by Baron & Kenny(1986) generally used. As
shows, Step 1 and Step 2 are significant, and mediation variable has a significant effect on dependent variables and so does independent variables at Step 3, too. And there needs to prove the partial mediation effect, independent variable's estimate ability at Step 3(Standardized coefficient $\beta$eta : efficiency=.164, system availability=.074, fulfillment=.108, privacy=.107) is smaller than its estimate ability at Step 2(Standardized coefficient $\beta$eta : efficiency=.409, system availability=.227, fulfillment=.386, privacy=.237), so it was proved that overall service quality played a role as the partial mediation between on-line service quality and satisfaction. As
shows, Step 1 and Step 2 are significant, and mediation variable has a significant effect on dependent variables and so does independent variables at Step 3, too. And there needs to prove the partial mediation effect, independent variable's estimate ability at Step 3(Standardized coefficient $\beta$eta : responsiveness=.164, compensation=.117, contact=.113) is smaller than its estimate ability at Step 2(Standardized coefficient $\beta$eta : responsiveness=.409, compensation=.386, contact=.237), so it was proved that overall service quality played a role as the partial mediation between on-line service recovery and satisfaction. Verified results on the basis of empirical analysis are followed. First, as the result of , it shows that all were chosen, so on-line service quality has a positive effect on overall service quality. Especially fulfillment of overall service quality has the most effect, and then efficiency, system availability, privacy in order. Second, as the result of , it shows that all were chosen, so on-line service recovery has a positive effect on overall service quality. Especially responsiveness of overall service quality has the most effect, and then contact, compensation in order. Third, as the result of and , it shows that and all were chosen, so overall service quality has a positive effect on customer satisfaction, customer satisfaction has a positive effect on loyalty intention. Fourth, as the result of and , it shows that and all were chosen, so overall service quality plays a role as the partial mediation between on-line service quality and customer satisfaction, on-line service recovery and customer satisfaction. 5. Conclusion This study measured and analyzed service quality and service recovery of the Web sites that customers made a reservation and issued their air tickets, and by improving customer satisfaction through the result, this study put its final goal to grope how to keep loyalty customers. On the basis of the result of empirical analysis, suggestion points of this study are followed. First, this study regarded E-S-QUAL that measures on-line service quality and E-RecS-QUAL that measures on-line service recovery as variables, so it overcame the limit of existing studies that used modified SERVQUAL to measure service quality of the Web sites. Second, it shows that fulfillment and efficiency of on-line service quality have the most significant effect on overall service quality. Therefore the Web sites of reserving and issuing air tickets should try harder to elevate efficiency and fulfillment. Third, privacy of on-line service quality has the least significant effect on overall service quality, but this may be caused by un-assurance of customers whether the Web sites protect safely their confidential information or not. So they need to notify customers of this fact clearly. Fourth, there are many cases that customers don't recognize the importance of on-line service recovery, but if they would think that On-line service recovery has an effect on customer satisfaction and loyalty intention, as its importance is very significant they should prepare for that. Fifth, because overall service quality has a positive effect on customer satisfaction and loyalty intention, they should try harder to elevate service quality and service recovery of the Web sites of reserving and issuing air tickets to maximize customer satisfaction and to secure loyalty customers. Sixth, it is found that overall service quality plays a role as the partial mediation, but now there are rarely existing studies about this, so there need to be more studies about this.
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.
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