Optimal marketing channel and strategy in social commerce

Abstract

This paper aims to explore the optimal marketing channel of e-commerce enterprises with various consumer base size and product added-value in social commerce. By characterizing the consumer utility, we construct decision-making models of e-commerce enterprises under the traditional e-commerce platform (TECP) and two kinds of social commerce marketing channels involving "e-commerce platform + social"(ECPS) and "social media + businessa-(SMB). Then, we obtain the optimal strategy of e-commerce enterprises for each channel by using the Karush-Kuhn-ATucker (KKT) conditions, and verify the effectiveness of the corollaries by numerical simulation. Results find that social commerce marketing channels (ECPS and SMB) are not necessarily better than TECP. For e-commerce enterprises with low consumer base size and low product added-value, the TECP channel offers the largest profit. Besides, SMB is the preferred marketing channel for most e-commerce enterprises.