Research on Manufacturers’ Referral Strategy Considering Store Brand Retailers and Traditional Retailers

Feiyan Han, Herui Wang, Hongyu Lv and Bo Li ()
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Feiyan Han: Economics and Management Department, Xinzhou Teachers University, Xinzhou 034000, China
Herui Wang: Materials and Technical Standards Office, China Petroleum Materials Limited Corporation, Beijing 100029, China
Hongyu Lv: College of Management and Economic, Tianjin University, Tianjin 300072, China
Bo Li: College of Management and Economic, Tianjin University, Tianjin 300072, China

Mathematics, 2022, vol. 10, issue 18, 1-23

Abstract: It has become a common commercial phenomenon for retailers to establish their own brands. The manufacturer referral strategy is studied through a model which includes a manufacturer, a traditional retailer and a store brand retailer. We conduct research on the three cooperation methods of the manufacturer: “no information referral”, “exclusive referral” and “nonexclusive referral”. The equilibrium wholesale price, the manufacturer’s order quantity and the retailer’s own product output are studied by constructing game models, and the best referral cooperation choice between the manufacturer and the retailer is analysed according to their profit. The results show that the manufacturer’s referral level choice does not change the number of products, while the manufacturer’s market loss rate leads to a change in product order quantity among different choices. Under the combined effect of the market loss rate and the intensity of market competition, the store brand retailer will change the output decision of its own products. When the market loss rate meets a certain range, the manufacturer’s product sales can be maximized. For the manufacturer, any referral strategy is better than no referral strategy, and in most cases, the manufacturer prefers nonexclusive referrals. The traditional retailer is willing to accept the manufacturer’s referral cooperation, and the traditional retailer’s profit is better under the nonexclusive referrals; while most store brand retailers are willing to choose the nonexclusive referrals.

Keywords: supply chain; manufacturer referrals; store brand retailer; Stackelberg game (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2022
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