Abstract: When SMMs (Small and Medium-sized Manufacturers) sell their products in both the traditional retail channel and online direct channel, they usually suffer prices conflicts with their retailer as they are non-dominant in the traditional retail channel. In this paper, a spatial competition equilibrium model is developed to describe pricing and coordination in dual-channel. The impact of digital attributes of product on the demand of dual-channel is also quantified in our model. Then optimal pricing strategies are presented in two power structures, a manufacturer and a retailer making decisions independently, and a retailer leading and a manufacturer following in Stackelberg game. Furthermore, the impact of the digital attributes of product and power structure changing on optimal pricing is investigated. Our analyses show that, the non-dominant SMMs' pricing should depend on the dominant retailers'. This strategy helps SMMs and the retailers to optimize their profits, and to improve the total profit of dual-channel. Online direct price increases with the increase of digital attribute of product, while the retail price decreases with the increase of digital attribute. The retail price and the direct price in the retailer leading and the manufacturer following situation are both higher than those in independent decision-making situation. The results are helpful for a large number of SMMs to determine their strategies of pricing and coordinating in dual-channel.

Key words: dual-channel, pricing strategies, small and medium-sized manufacturers, digital attributes of product