Service Principal Selection and Pricing Strategies : Service Robots vs. Human Staff

As a new service principal, service robots have been increasingly penetrating into service industries. However, it is still unclear whether robots should be introduced to replace or cooperate with human staff as a service principal. To explore into this issue, we establish models about four strategies, i.e., a single delivery channel with human staff (Strategy SE) or with service robots (Strategy SR), dual delivery channels consisting of both human staff and service robots under equal pricing (Strategy JM) and differentiated pricing (Strategy JF). Comparing the equilibrium results of the models, we find that the dual service delivery channel with both robots and human under differentiated pricing (Strategy JF) outperforms the others in terms of profitability. However, diversity of service principal contributes to profitability but not the service quality, the service quality under dual channels is lower than that of single channels, which is not beneficial to consumers. Besides, within a dual channel, the competition between human and robots reduces the total demand and profit but does not always show a negative impact for each single service principal. Through numerical analysis, we show that when consumers’ sensitivity towards the service quality is high (low), consumers obtain lower (higher) surplus under dual service channels than under single channels, and we further show that the principal power structure plays a key role in shaping the impact mechanism of the principal competition on the principal selection decisions