While retailers have sales data to forecast demand, manufacturers have a broad understanding of the market and the coming trends. It is well known that pooling such demand information within a distribution channel improves supply chain logistics. However, little is known about how information-sharing affects wholesale pricing incentives. In this paper, we investigate a channel structure where a manufacturer and two retailers have private signals of the state of the demand. Our model identifies the presence of a pricing distortion, which we term the , when a manufacturer sets price to an uninformed retailer. Because of this inference effect, the manufacturer would like to set a low wholesale price to signal to the retailer that the demand is low. On the other hand, the manufacturer would like to set a high wholesale price so that he earns the optimal margin on each unit sold. Vertical information sharing benefits the manufacturer by eliminating the distortion caused by the inference effect, which is more profound in a channel whose retailer has a noisier signal. This result implies that when there is a cost associated with transmitting information, the manufacturer may choose to share information with only the less-informed retailer rather than with both.channels of distribution, information sharing, retailing, game theory

The growing dominance of large retailers has altered traditional channel incentives for manufacturers. In this paper, we present a theoretical model to illustrate a strategic manufacturer response to a dominant retailer. In our model, a dominant and a weak retailer compete for the sale of a single product supplied by a single manufacturer. The dominant retailer has the power to dictate the wholesale price, but the manufacturer sets the wholesale price for the weak retailer. The manufacturer also has partial ability to transfer demand between retailers. In the strategic manufacturer response, the manufacturer begins by raising the wholesale price for the weak retailer over that for the dominant retailer. This makes the weak retailer the high-margin channel. The manufacturer then transfers demand to the weak retailer by engaging in joint promotions and advertising. We then use this strategic response model to derive a testable hypothesis that may guide future research in determining the source of dominant retailers' low prices.channels of distribution, channel power, retailing, game theory

In certain product categories, large discount retailers are known to offer shallower assortments than traditional retailers. In this paper, we investigate the competitive incentives for such assortment decisions and the implications for manufacturers' distribution strategies. Our results show that if one retailer has the channel power to determine its assortment first, then it can strategically reduce its assortment by carrying only the popular variety while simultaneously inducing the rival retailer to carry both the specialty and popular varieties. The rival retailer then bears higher assortment costs, which leads to relaxed price competition for the commonly carried popular variety. We also show that when the manufacturer has relative channel power, it chooses alternatively to distribute both product varieties through both retailers. Our analysis suggests, therefore, that when a retailer becomes dominant in the distribution channel, it facilitates retail segmentation into discount shops, carrying limited product lines, and specialty shops carrying wider assortments. We also illustrate how retailer power leading to strategic assortment reduction can lead to lower consumer surplus.channels of distribution, channel power, assortment, retailing

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Co-branding is often used by companies to reinforce the image of their brands. In this paper, we investigate the conditions under which a brand's image is reinforced or impaired as a result of co-branding, and the characteristics of a good partner for a firm considering co-branding for image reinforcement. We address these issues by conceptualizing attribute beliefs as two-dimensional constructs: The first dimension reflects the expected value of the attribute, while the second dimension reflects the degree of certainty about the attribute. We argue that these parameters are updated after consumers are exposed to a co-branding activity, and we develop an analytical model that incorporates these notions. An analysis of the model leads to several propositions, which we test in an experiment. Our findings indicate that it is not necessarily in a brand's best interest to choose an alliance partner that is of the highest performance possible. Moreover, we find that, while expected values of the brand attributes may improve as a result of co-branding, under certain conditions the uncertainty associated with the brands increases through the alliance. Implications for co-branding researchers and practitioners are discussed.brand alliances, spillover effects, co-branding, image reinforcement, brand positioning