Supply chain channel selection and discount strategy under influencer marketing

Abstract

Influencer marketing is driving economic growth. Although influencer channels can expand product demand, they may also cause conflicts with the original direct sales channels. A price war under influencer marketing intensifies the contradiction between brand owners and influencers. Considering the entertainment and customer base effects of the influencer channel, this study develops a game-theoretical model between a brand owner and an influencer to discuss the brand owner's channel selection decision and the long-term impact of the discount in the influencer channel on the brand owner and influencer. Our results show that the streaming costs and product value determine the brand owner's optimal channel strategy. Brand owners should switch to influencer marketing when the streaming costs are low. Although a discount on the influencer channel can improve the influencer’s profit in the short term, the brand owner expects a discount on the influencer channel and adjusts the price of the product in the long run. Discounting the influencer channel may become a strategic tool for brand owners to handle conflicts of interest and reduce the influencer’s profit.