Distribution Intensity Retailer Competition And Channel Coordination
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Author | : Amiya Basu |
Publisher | : |
Total Pages | : 0 |
Release | : 2023 |
Genre | : |
ISBN | : |
We analyze a channel of distribution where a monopolistic manufacturer, as leader of the channel, selects distribution intensity and wholesale price, and independent retailers follow by selecting price. Retailer competition is analyzed using a new model that combines the Salop model of circular city and equidistant retailers with linear demand at each location on the circle. We obtain the Nash equilibrium in retailer prices in closed form and show that through the choice of decision variables, the manufacturer can dictate whether the retailers are local monopolies or in competition, and how much market is served. By increasing distribution intensity, the manufacturer can suppress retailer mark-ups, approximately coordinate the channel, and secure most of the profit gains. Assuming that a retailer requires a minimum profit to participate, we show that the manufacturer can coordinate the channel by setting a wholesale price higher than the manufacturer's marginal cost if there are multiple competing retailers. We show that the manufacturer's profit is maximized by a two-part tariff system with a fixed fee, and identify two simpler systems that give close to optimal profits without imposing any fee. Finally, we identify an exclusivity parameter capturing the quality of the product, and show that distribution intensity should be low when exclusivity is high. We also show that a manufacturer may find it profitable to increase distribution intensity by subsidizing the retailers when exclusivity is low.
Author | : Charles A. Ingene |
Publisher | : Springer Science & Business Media |
Total Pages | : 590 |
Release | : 2006-01-27 |
Genre | : Business & Economics |
ISBN | : 0387227903 |
Mathematical Models of Distribution Channels identifies eight "Channel Myths" that characterize almost all analytical research on distribution channels. The authors prove that models that incorporate one or more Channel Myths generate distorted conclusions; they also develop a methodology that will enable researchers to avoid falling under the influence of any Channel Myth.
Author | : Charles A. Ingene |
Publisher | : Edward Elgar Publishing |
Total Pages | : 608 |
Release | : 2019 |
Genre | : Business & Economics |
ISBN | : 0857938606 |
Distribution channels are the most complex element of the marketing mix to fully grasp and to profitably manage. In this Handbook the authors present cutting-edge research on channel management and design from analytical, conceptual, and empirical perspectives. The breadth of this Handbook makes it appropriate for use in a doctoral course on distribution channels, or as a knowledge-broadening resource for faculty and researchers who wish to understand types of channels research that are outside the scope of their own approach to distribution.
Author | : Charles A. Ingene |
Publisher | : |
Total Pages | : 0 |
Release | : 2000 |
Genre | : |
ISBN | : |
A fundamental task for supply-chain managers is to determine wholesale-prices. Such determination is a core theme in the marketing science literature on distribution channels?which seems to have concluded that channel coordination?setting wholesale-prices to maximize total channel profit?is "good." This judgement is based on analyses of bilateral monopoly models, within which profit may be redistributed to the benefit of all channel members. However, many manufacturers deal with multiple, competing retailers. The pure logic of bilateral monopoly models holds in the presence of multiple retailers if and only if the manufacturer can price discriminate between retailers. Although mechanisms for price discrimination exist, in many situations they are infeasible, illegal or both. When retailers compete there are two feasible and legally permissible methods of achieving channel coordination: a quantity-discount schedule or a menu of two-part tariffs. (The latter is derived in detail in this paper.) A feasible and legally permissible alternative to channel coordination is for the manufacturer to utilize a sophisticated Stackelberg two-part tariff. While such a tariff cannot coordinate the channel, it is the best of all possible two-part tariffs from the viewpoint of maximizing manufacturer profit. Manufacturers are ultimately interested in their own profitability; it follows that channel coordination is manufacturer-optimal only if it generates at least as great a level of profit for the manufacturer as does non-coordination. In this paper we determine if a channel coordinating wholesale-price strategy manufacturer profit-dominates a sophisticated Stackelberg two-part tariff. We show that the optimal policy is dependent on (a) the retailers' fixed costs, (b) the relative size of the retailers and (c) the degree of inter-retailer competition. We conclude that, from the perspective of a manufacturer, channel coordination is often undesirable relative to utilizing a non-coordinating, sophisticated Stackelberg price-strategy. Therefore, channel coordination can no longer be regarded as the ultimate goal toward which supply-chain managers should uncritically strive.
Author | : Tamer Boyaci |
Publisher | : |
Total Pages | : 74 |
Release | : 2001 |
Genre | : Business logistics |
ISBN | : |
Author | : Kitty Koelemeijer |
Publisher | : |
Total Pages | : 334 |
Release | : 2000 |
Genre | : Competition |
ISBN | : |
Author | : Kusum L. Ailawadi |
Publisher | : John Wiley & Sons |
Total Pages | : 387 |
Release | : 2020-04-14 |
Genre | : Business & Economics |
ISBN | : 1119632889 |
Getting Multi-Channel Distribution Right provides a comprehensive treatment of modern distribution strategy that is analytically solid, clearly written, and relevant for managers as well as MBA and executive MBA students, and the professors who train them. It covers concepts, metrics, tools, and strategic frameworks for managing distribution in physical and digital channels. Focusing on the challenges of managing multiple channels of distribution in an evolving marketplace—rather than the process of designing a distribution channel from scratch—it leans more heavily on metrics and tools and incorporates perspectives from academic research, as well as in-depth case studies from marketing and general management practice. Introduces an organizing framework of pull and push marketing for how suppliers work together with their channel partners. Integrates across physical and digital, independent and company-owned, routes to market. Maps the functions of traditional and newer intermediaries in the channel ecosystem and identifies the root causes of conflict between them. Provides tools and frameworks for how much distribution coverage is required and where. Shows how product line, pricing, trade promotions, and other channel incentives can help to coordinate multiple channels and manage conflict. Illustrates how push and pull metrics can be combined into valuable dashboards for identifying positive feedback opportunities and sustaining the channel partnership. With the help of Getting Multi-Channel Distribution Right you’ll discover how to successfully develop, execute, and adapt distribution strategy to the evolving marketplace.
Author | : Anthony J. Dukes |
Publisher | : |
Total Pages | : 0 |
Release | : 2015 |
Genre | : |
ISBN | : |
We study the effects of retailer in-store media on distribution channel relationships. With modern communication technology, retailers can open in-store media (ISM) in their stores and allow manufacturers to advertise in-store. We show that ISM has an important role in coordinating a distribution channel on advertising volume, product sales, and mitigating supplier competition. Improved channel coordination is achieved through the internalization of advertising decisions from commercial forms of media (i.e., radio, TV, newspaper, etc.). We show how a retailer may strategically subsidize manufacturers on their advertising through ISM to better coordinate the channel. This subsidization is optimal even if ISM is more effective than commercial media. With manufacturer competition, a retailer can strategically use a "competitive premium" to ration excessive advertising between competing suppliers in a category. When manufacturers are asymmetric with pre-advertising brand awareness, a retailer has an incentive to price discriminate by charging lower prices to manufacturers whose brand awareness is higher. In addition, retailer ISM can benefit social welfare even when in-store media is less effective than commercial media. However, if in-store media effectiveness is very low, a retailer may introduce in-store media for its own benefit to the detriment of social welfare.
Author | : Srinivas K. Reddy |
Publisher | : Routledge |
Total Pages | : 345 |
Release | : 2012-08-09 |
Genre | : Marketing channels |
ISBN | : 0415540399 |
Retailer's buying power has significantly increased in recent years as a result of a process of market concentration. As vertical relationships in marketing channels have strengthened their influence over the shape of the industry, the producer-distributor relationship has become more central to an understanding of both marketing practice and the conduct and performance of consumer goods industries. This comprehensive and detailed book covers the theory and practice of national and international retail and marketing channels. It provides a structural overview of the producer-distributor relationship as well as analyses of specific aspects of channel control and management. Finally, the book assesses the implications of new developments in the evolution of marketing channels. First published 1989.
Author | : Louis W. Stern |
Publisher | : |
Total Pages | : 328 |
Release | : 1969 |
Genre | : Business & Economics |
ISBN | : |