Manufacturers׳ channel structures when selling asymmetric competing products

Yang, Shilei; Shi, Victor; Jackson, Jonathan E.

doi:10.1016/j.ijpe.2015.04.003

Cited by 44 publications

(13 citation statements)

References 29 publications

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“…Several papers have studied the case of two manufacturing firms selling competing products through exclusive channels, i.e., each manufacturer may distribute through only one type of channel. Yang et al (2015) modeled such a supply chain, assuming that the products offered by the different suppliers were asymmetric in both substitutability and brand equity. The authors found that when asymmetry is higher, manufacturers are more likely to sell through direct channels.…”

Section: Literature Reviewmentioning

confidence: 99%

Pricing decisions in a dual supply chain of organic and conventional agricultural products

2019

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We analyze a dual-channel supply chain comprising two suppliers that offer vertically-differentiated agricultural products; specifically, one offers an organic version of an agricultural product and the other offers a conventionally-grown version of the same product. Each supplier distributes his product through two channels: directly to consumers and via a single retailer who sells both product versions. Consumers are assumed to be heterogeneous in their valuations of the benefits associated with organic products and of the benefits of purchasing from a retailer (reflected, e.g., in extra services). We also assume that the agricultural products can depreciate in value (e.g., due to deterioration and spoilage). We study market competition in the case where all supply chain members (the two suppliers and the retailer) determine their prices simultaneously in order to maximize their respective profits. First, we analytically solve the cases where organic and conventional value depreciations are equal in each channel or where the direct and the retailer value depreciations are equal for each product. Under these assumptions, we show that each supplier sets a wholesale price that is equal to the direct price. Moreover, the price margins set by the retailer for both the organic and conventional versions are identical. The more general case is analyzed numerically; this analysis reveals the relationships between the model parameters, the equilibrium pricing and the profits of the supply chain members. We identify the conditions under which the wholesale prices of each product version are higher than the direct prices.

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Section: Literature Reviewmentioning

confidence: 99%

Pricing decisions in a dual supply chain of organic and conventional agricultural products

2019

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“…Ha et al (2016) show that a manufacturer offering differentiated products through two channels prefers to sell its high-tier product through a direct channel. Several other papers have studied endogenous quality in supply chain coordination (e.g., Bacchiega and Bonroy (2015), Yang et al (2015), brand value (e.g., Choi and Coughlan (2006) and Davcik and Sharma (2015)), and product line design (e.g., Desai (2001)). This paper follows this stream of research by treating product quality as a decision variable for the manufacturer, but differs in an important way: we examine the strategic consequences of cannibalisation and competition under manufacturing/marketing trade-offs.…”

Section: Relevant Literaturementioning

confidence: 99%

Selling vertically differentiated products under one channel or two? A quality segmentation model for differentiated distribution channels

Chai

Yan

et al. 2019

Journal of the Operational Research Society

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Many manufacturers, including Lenovo, Sony, Procter & Gamble, and Buckle, have adopted differentiated distribution channels to market vertically differentiated products. However, there is scant literature addressing the issue of quality differentiation in the presence of differentiated distribution channel policies. To fill this void, we examine whether (how) differentiated channel policies affect manufacturers' quality differentiation and all parties' performance. Specifically, we consider a manufacturer who produces two vertically differentiated products (high-and low-tier ) together, but with two marketing options: (1) distributing both products through one retailer (Model O, One-channel policy), or (2) providing high-quality products through one channel but low-tier products through another (Model T, Two-channel policy). Our results show that the manufacturer is more likely to decrease the level of quality differentiation in Model T than in Model O. Moreover, contrary to popular belief, we show that "quality distortion" is not limited to low-tier products but can occur with high-tier products.Among other results, we find that the one-channel policy benefits the retailer but hurts both the manufacturer and the total supply chain. To test the robustness of the results, we also comment on how the additional horizontal consumer heterogeneity affects our results and the implications of the competition at the manufacturer level.

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“…There are a few papers discussing price-quantity competition with vertical relations (e.g., Manasakis and Vlassis, 2014;Yang et al, 2015;Basak and Wang, 2016;Fanti and Scrimitore, 2019). We discuss two categories of papers whose market structure is the same as ours: (i) endogenous choices of price and quantity in asymmetric downstream duopoly models, (ii) optimal channel structures.…”

Section: Related Literaturementioning

confidence: 99%

Competition between Physical and Electronic Content Retailers

2021

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We investigate a model in which a monopoly supplier distributes two types of its product through a traditional retailer with a wholesale price contract and an online retailer with an agency contract. Because such an agency contract eliminates the double marginalization problem, the online retailer has a cost advantage over the traditional retailer. Given the advantage of the online retailer, we also consider a possible request by the traditional retailer: the retail price of the online retailer is not smaller than the wholesale price for the traditional retailer. We obtain the following results.An increase in the online retailer's bargaining power over the supplier benefits the two retailers but harms the supplier. Under the request to protect the traditional retailer, the wholesale price is strictly higher than that in the baseline model. The retailers' equilibrium prices are also strictly higher than those in the baseline model. The request benefits the supplier and the online retailer, but harms the traditional retailer.

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Manufacturers׳ channel structures when selling asymmetric competing products

Cited by 44 publications

References 29 publications

Pricing decisions in a dual supply chain of organic and conventional agricultural products

Pricing decisions in a dual supply chain of organic and conventional agricultural products

Selling vertically differentiated products under one channel or two? A quality segmentation model for differentiated distribution channels

Competition between Physical and Electronic Content Retailers

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