Impact of manufacturer and retailer's market pricing power on customer satisfaction incentives in supply chains

Charles Wang, Zhuang Qian and Yabing Zhao

International Journal of Production Economics, 2018, vol. 205, issue C, 98-112

Abstract: Many manufacturers are offering some form of supply chain incentives to motivate their retailers to increase customer satisfaction (CS). In this paper, we focus on the manufacturer's two main CS incentives for the retailer: customer satisfaction index bonus (CSI bonus) and customer satisfaction assistance (CS assistance). When both manufacturer and retailer have strong market pricing power, prior research has shown that the manufacturer should offer both CSI bonus and CS assistance to the retailer. In contrast with prior research results, we find if the manufacturer has weak market pricing power, then she should only offer CS assistance but not CSI bonus to the retailer when the market wholesale price is relatively low. We also quantify the value of the CS incentive programs to the manufacturer's performance improvement in different supply chain settings. In general, we find the manufacturer's CS incentive program is more valuable when demand is more sensitive to the retailer's CS effort. Finally, we obtain additional insights from a few supply chain model extensions.

Keywords: Supply chain; Channel of distribution; Customer satisfaction incentives; Market pricing power; Game theory (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527318303542
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:205:y:2018:i:c:p:98-112

DOI: 10.1016/j.ijpe.2018.08.034

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 ().