Impact of self-operated product recommendation strategies on price competition:A study in the context of mobile health platforms
Apart from selling their own products,online platforms actively promote and sell products from third-party merchants.These merchants willingly join online platforms to gain significant exposure for their products.This trend is also observed in popular mobile health(mHealth)platforms,such as Keep,Codoon Sports,and Huawei Health.These platforms allow third-party merchants to sell items on their platforms,including treadmills,sports bracelets,and yoga mats.However,mHealth platforms typically prioritize the promotion of their own products to users.For example,Huawei's self-operated products,including Huawei bracelets,are prioritized on their sales interface.Consequently,this study aims to investigate the influence of self-operated product recommendation strategies on transaction outcomes of mHealth platforms,particularly by considering the role of the difference of user cognition levels and platform decision-making.This study seeks to answer two key questions:How does a self-operated product recommendation strategy affect price competition and profitability between platforms and third-party merchants?What kind of self-operated recommendation strategies can protect their own interests and incentivize third-party merchants to join?This study proposes a product differentiation model for mHealth platforms to characterize the competition between self-operated and third-party products.The proposed model examines the impact of different levels of self-operated product recommendation strategies on price competition between platforms and third-party merchants,and the economic implications of these recommendation strategies.The model presented in this paper can also be applied to other types of online platforms with similar characteristics.Other online platforms can refer to the findings of this study to assess the advantages and disadvantages of implementing self-operated product recommendation strategy.At the same time,platforms need to focus on how their competitors react to their management strategies.In addition,our model helps explain the motivations of third-party merchants to collaborate with platforms,suggesting a preferential recommendation strategy under different market conditions.This study differs from the existing literature because it considers the unique situation in market competition,specifically the dominant market position held by mHealth platforms.We propose conditions for establishing collaboration relationship between platforms and third-party merchants based on self-operated product recommendation strategies.Moreover,we investigate the impact of different recommendation preferences on the profitability of platforms and third-party merchants.The results are as follows.1)The partnership between platforms and third-party merchants is mutually beneficial when users are already highly aware of third-party products.2)When there is a significant difference in user cognition between self-operated and third-party products,an excessive recommendation strategy for self-operated products may discourage third-party merchants from joining platforms.3)When the difference in user cognition is small,third-party merchants have already gained sufficient exposure.Hence,they have minimal concern with the platforms'self-operated product recommendation strategies.4)Third-party merchants should fully understand the recommendation strategies adopted by the platform,analyze the market environment of their products,and selectively enter the platform.When the platform adopts an excessively high level of priority recommendation for self-operated products,third-party merchants should refuse to cooperate with the platform to obtain more profits.5)Lastly,user trust in recommendation systems and high costs associated with mismatches can reduce platforms'incentive to recommend third-party products.This paper holds substantial theoretical and practical significance.First,this study distinguishes the effects of mHealth platform and third-party merchant products on user health status and also extends the existing literature by considering the unique characteristics of platforms in competitive markets.Second,we analyze the influence of platform recommendation strategies on third-party merchants,particularly by integrating the market dominance of online platforms into the management strategies of recommendation systems,which addresses the limitations of the existing literature.Third,the current research offers practical implications for platform managers,emphasizing the need to be aware of competitors'reactions to self-operated product recommendation strategies and to adopt a moderate level of priority recommendation strategies for self-operated products to maintain cooperation with third-party merchants.Fourthly,based on the results of this study,third-party merchants can optimize their own product display and recommendation strategies,so as to better cooperate with the platform and enhance their competitiveness.Therefore,this study provides a crucial theoretical foundation for platform recommendation strategy design and contributes to the literature on platform and third-party merchant competition.
Self-operated productsRecommendation strategiesPrice competitionMobile health
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