Supply chain channel strategies with quality and marketing effort-dependent demand

Peng Ma, Haiyan Wang and Jennifer Shang

International Journal of Production Economics, 2013, vol. 144, issue 2, 572-581

Abstract: We investigate the equilibrium behaviors of a two-stage supply chain (SC) under three supply chain structures: (i) manufacturer Stackelberg (MS), (ii) retailer Stackelberg (RS) and (iii) vertical Nash (VN). Given quality and marketing effort-dependent demand, we develop models to optimize the retailer's and the manufacturer's effort levels and profits using different channel strategies. We find that the retailer's profit and marketing effort level are most sensitive to the marketing cost coefficient in the MS model. The manufacturer's profit and quality-improvement effort level are most sensitive to the quality cost coefficient in the RS model. Numerical examples are provided to illustrate the efficiency and effectiveness of the proposed models. Finally, we find that if the retailer does not exert marketing effort, the manufacturer will commit much less quality-improvement effort. Similarly, if the manufacturer does not make any commitment to quality-improvement effort, then the retailer will exert less marketing effort. In general, investing in marketing efforts is most profitable to the retailer under RS, while investing in quality efforts is most profitable to the manufacturer under MS.

Keywords: Marketing effort; Quality effort; Manufacturer Stackelberg; Retailer Stackelberg; Vertical Nash; Quality and marketing effort-dependent demand (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527313001849
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:144:y:2013:i:2:p:572-581

DOI: 10.1016/j.ijpe.2013.04.020

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().