The proliferation of electronic commerce(EC) has led manufactureres to consider Internet based marketing as a salient candidate for strategic diversification of marketing channel. In this case, each manufacturer can build its own Web store or rent an existing special EC store. Such decision making of ‘build’ or ‘rent’ can be analyzed by a game model which derives the Nash solutions for price and profit considering degree of competition with other competitive manufacturers. In this paper, to overcome the drawbacks of the traditional linear demand function, we first propose a new linear demand function which incorporates not only the price difference between competitive products but the awareness of Web stores perceived by the consumers, then design the game models to analyze the characteristics of three typical types of marketing channel in duopoly market. Based on the Nash solutions of the game models, we analyzed the effect of the degree of competition and Web awareness in selecting the optimal marketing channel.