Exclusive Channels and Revenue Sharing in a Complementary Goods Market

This paper evaluates the joint impact of exclusive channels and revenue sharing on suppliers and retailers in a hybrid duopoly common retailer and exclusive channel model. The model bridges the gap in the literature on hybrid multichannel supply chains with bilateral complementary products and services with or without revenue sharing. The analysis indicates that, without revenue sharing, the suppliers are reluctant to form exclusive deals with the retailers; thus, no equilibrium results. With revenue sharing from the retailers to the suppliers, it can be an equilibrium strategy for the suppliers and retailers to form exclusive deals. Bargaining solutions are provided to determine the revenue sharing rates. Our additional results suggest forming exclusive deals becomes less desirable for the suppliers if revenue sharing is also in place under nonexclusivity. In our extended discussion, we also study the impact of channel asymmetry, an alternative model with fencing, composite package competition, and enhanced price-dependent revenue sharing

The Smartphone as the Incumbent “Thing” among the Internet of Things

The smartphone has been the ubiquitous computing platform in the past decade. However, emerging consumer Internet of Things (IoT) technology trends, such as smartwatches and smart speakers, promise the establishment of new ubiquitous platforms. We model two competing horizontally-differentiated platforms that each offer a smartphone and another smart device. This market diverges markedly from standard mixed bundling results when devices from the same vendor have super-additive utility. We show that the degree of a smart device’s differentiation (relative to the smartphone) is the prime factor determining if it is profitable to deepen integration between a smart device with the incumbent smartphone platform. We provide managerial insights for technology strategy

Online Personalization And Information Sharing Under Horizontal Relationship

Customer preference information is of great importance for vendors to carry out price discrimination and targeted marketing. Advanced Internet technologies, especially web 2.0 and web-economy, have been provided accessibility and allowed vendors to acquire these information by the user-community and online personalization technologies. This study investigates an information market where the complementary firm pays to the vendor to indirectly acquire the customer preference information, which could be costly to acquire. We develop an economic model to examine vendor’s optimal information acquisition and sharing strategies under horizontal relationship under different payment formats of the complementary firm (i.e. fixed-fee or service-rate payment). We show that both payment formats improve the basic personalization service, and the basic personalization service is equal under two payment cases, but the extra personalization service under fixed-fee payment is higher than that under the service-rate payment. Nevertheless, the vendor’s equilibrium benefits are improved with information sharing under both payment formats. Moreover, although the complementary firm would get zero benefits under fixed-fee payment and positive benefits under service-rate payment, the customer preference information can be acquired under both cases. Our findings not only help researchers interpret why the vendors implement information sharing strategies, but also assist practitioners in developing better social commerce and cooperation strategy. The implications of this paper can shed light on how firms interact under horizontal relationship where a vendor possesses information superiority

The effects of decision timing for pricing and marketing efforts in a supply chain with competing manufacturers

Producción CientíficaThis paper investigates the impact of decision timing for pricing and marketing efforts in a supply chain led by competing manufacturers. We develop and solve six games to consider the scenarios (games) where prices and marketing efforts (ME) are decided simultaneously, and when they are not (i.e., ME is set either before or after prices). We examine these three scenarios for the benchmark case of a bilateral monopolistic channel, then extend the analysis to a supply chain with competing manufacturers. We identify the optimal decision timing by comparing equilibrium profits and strategies across games in each supply chain setup. We find that a monopolistic manufacturer always prefers that prices and ME be decided simultaneously. However, this result does not hold when product competition is taken into account. The optimal decision timing for competing manufacturers depends on the retailer's and manufacturers' ME effectiveness levels as well as on competition intensity. Specifically, when ME are not very effective, a simultaneous decision scenario is preferred because it provides the advantage of higher profit margins or sales. However, for highly effective ME, manufacturers prefer to decouple ME and pricing decisions. The retailer's optimal scenario is either to make all decisions simultaneously or to choose prices prior to ME. This means that supply chain firms can face conflict due to the decision timing for prices and ME

Agricultural development and emerging small-scale farmers in Mbizana Local Municipality

The agricultural sector is among one of the sectors that contribute to the economy of the country, in job creation and food security to mention a few aspects. The Eastern Cape Province is one of the poorest provinces in the country where most people depend on small-scale agriculture as their major source of livelihood, particularly in the rural areas. This is mainly due to the challenges of poverty and unemployment. Small-scale farming is a key activity to eliminate poverty and unemployment. However, mainly obstacles prevail and this includes access to markets, support and skills development. This research study aims to investigate the sustainability of small-scale farmers. The data was collected by means of in depth interviews from Mbizana local Municipality. A total of 12 respondents were selected as a sample for this investigation as well as ensuring that data quality is attained. Causal layered analysis was used to analyse the results. The results indicate that small-scale farmers are faced with several challenges which include, finance, skilled contractors and land ownership. Furthermore, it is evident that small-scale farmers are struggling to obtain a sustainable economic return. Farmers can participate in high-value markets by obtaining the required food safety certifications, which otherwise would be inaccessible to them individually but as groups or cooperatives to enhance them to easily access markets. In local informal markets, for instance, smallholders often find their prices undercut by produce that informal traders buy from large-scale commercial farmers. Supermarket chains, on the other hand, provide a lucrative niche market for smallholders but these downstream linkages are limited to smallholders that meet product variety and quality standards

The impact of a store brand introduction in a supply chain with competing manufacturers: The strategic role of pricing and advertising decision timing

This research studies the impact of a store brand’s introduction in a supply chain where a retailer offers the national brands of competing manufacturers. The focus in this paper is to study such impact given different manufacturers’ decision timing choices with regards to how they set pricing and advertising decisions. We develop a game-theoretic model that is based on consumer utility functions to represent competition between the national and store brands. We then solve six games to take into account different decision timing choices. In particular, we consider whether manufacturers decide of advertising before, after, or at the same time than pricing. Comparisons of equilibrium profits for each supply chain member before and after store brand entry under each decision timing scenario show that national brand manufacturers incur losses as a result of the retailer’s store brand when they keep their decision timing unchanged. Interestingly, however, the retailer may restrain from introducing the store brand especially if the national brand manufacturers set pricing decisions before advertising, as is the case with fixed pricing contracts, and if the level of competition between the national brands is sufficiently high. Further, manufacturers can strategically change their decision timing to either benefit from, prevent or restrict losses from the retailer’s store brand. These results provide new insights on how competitive interactions and contractual agreements in manufacturer-led supply chains can impact the success of store brands for retailers and mitigate or intensify their threat for national brands.Agencia Estatal de Investigación (AEI) - Junta de Castilla y León (projects ECO2017-82227-P, PID2020-112509GB-I00 and VA169P20

Exploring the omnichannel transformation of material-handling configurations and logistics capabilities in grocery retail

Grocery retail is going through a rapid shift. Consumers now expect to be able to shop online or in stores, get orders delivered when and where they want, and preferably as quickly as possible. This development is called omnichannel and means grocery retailers must transform their logistics networks to meet consumers’ evolving expectations and demands. The omnichannel transformation includes, for example, setting up new material handling (MH) nodes to pick online orders and investing in new automated systems. While this might sound straightforward, grocery retailers struggle to succeed with the omnichannel transformation, particularly in living up to consumers’ evolving expectations and becoming profitable. To develop theoretical and practical knowledge on this under-researched topic, this dissertation aimed to explore and understand the MH configurations and logistics capabilities needed in the omnichannel transformation of grocery retail and the dynamic capabilities required to manage such a transformation. In responding to this purpose, this dissertation makes several important contributions for researchers and practitioners who aim to understand how grocery retailers manage the omnichannel transformation and what they are doing to reconfigure MH configurations and logistics capabilities.The dissertation is based on the results of five articles from three separate but subsequent studies. The first study, a case study–inspired interview project, applied a contingency approach to explore the configurations of four manual online fulfillment centers (OFCs) in omnichannel grocery retail. The study captured key configurations, main challenges, and influential contextual factors. Study two, a multiple case study, focused on sorting in omnichannels. The study increased knowledge of sorting in omnichannels, and by combining empirical data with transvection theory, it also resulted in an artifact for analyzing and designing omnichannel sorting. The third and last study was a multiple case study of three grocery retailers and had a two-fold focus. First, this study moved beyond exploring specific aspects of the MH configurations and logistics capabilities in omnichannel grocery retail (OFC configuration and sorting) and focused on how and why grocery retailers manage the transformation by contextualizing dynamic capabilities. Second, study one revealed that investment in automation is as one key to being competitive in the omnichannel environment. Study three further explored automated online order picking systems and captured key configuration aspects, main performance objectives, and influential contextual factors. This dissertation contributes to the research by combining the findings from the three studies with literature on omnichannel logistics and MH in grocery retail, warehouse theory, and transvection theory to elaborate knowledge on what and dynamic capabilities to understand how. Moreover, a contingency approach helped investigate why grocery retailers invest in and reconfigure specific MH configurations and logistics capabilities, as well as why some grocery retailers are more successful than others with the omnichannel transformation. As a result, an elaborate and comprehensive framework arose that explains the what, how, and why of omnichannel grocery retail. The analysis and development of the framework revealed that omnichannel grocery retailers adapt their MH configurations and logistics capabilities to their external context to meet evolving customer expectations and requirements. Hence, the potential configurations and logistics capabilities that grocery retailers develop and invest in are influenced and constrained by the external context. The dynamic capabilities required to manage the omnichannel transformation could be identified by applying dynamic capabilities as a theoretical lens. The findings revealed that the identified dynamic capabilities enabling the transformation reside to a large extent on organization-level, both corporate and logistics

Multidomain Demand Modeling in Design for Market Systems.

Consumers make choices based not only on functional product attributes (e.g., fuel economy) but also on non-functional attributes (e.g., vehicle form). Consequently, ignoring non-functional product attributes in demand modeling can lead to product designs less attractive to consumers. This dissertation focuses on two major non-functional product attributes: (i) aesthetic product form as a perceptual product attribute and (ii) services as external product attributes. A limitation in conventional discrete choice analysis is that it handles functional and non-functional attributes within a single demand model. An aesthetic product form is generated by a potentially huge number of geometric variables; thus, it cannot be quantified simply and it is difficult to integrate with functional attributes. Similarly, when considering services, it is challenging to incorporate the relationship (or channel) between product and service attributes (or multiple providers) into a single demand model. This dissertation proposes a multidomain demand modeling approach to integrate functional and non-functional attributes, whose values are decided by different design domains, into a single demand model. We employ consumer choice models from Marketing, systems design optimization from Engineering, machine learning algorithms and human-computer interaction from Computer Science, and location network models from Operations Research within a design optimization framework. This work addresses three demand models: (i) a demand model for engineering and industrial design, (ii) a demand model for engineering and service design, and (iii) a demand model for engineering and operations design. The benefits of this unified approach is demonstrated through three respective design applications including gasoline vehicle design, electric vehicle and charging station location design, and tablet and e-book service design. The contribution of this research is in helping resolve trade-offs between conflicted design domain decisions, by integrating disparate attributes into a multidomain demand model. This work consequently extends the scope of Design for Market Systems from product design to business model design by considering external product attributes.PhDDesign ScienceUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/110471/1/nwkang_1.pd

Essays on Complementary Products and Strategies

Complementary products contribute significantly to the growth and sustenance of primary products and platforms in many high technology product markets. Although different literatures have investigated issues related to complementary products, our understanding on this topic is limited. This dissertation aims to address some of the questions in the growing literature on complementary products. Following the literature review, the third chapter develops the conceptual underpinnings of product complementarity and examines commonly specified definitions to clarify the dimensions of product complementarity. The fourth chapter addresses the boundary question from the perspective of a primary product firm. The theoretical model identifies the antecedents of the internalization decision emphasizing the influence of type of product complementarity and key environmental contingences, viz., technological and market demand uncertainty. The fourth and fifth chapters of the thesis examine the role of type of complementarity in predicting the governance choices of 31 public businesses over a time frame of 26 years in the PC industry, a setting where complementary products have significantly influenced the competitive and technological landscape. The study findings reveal that type of complementarity along with environmental contingences influence a firm's choice of internalization, alliances or complementor make. Market demand uncertainty influences the choice of strategy towards complementary product for moderately increasing levels of uncertainty while technological uncertainty predicts the governance choices for both low and moderately increasing levels of uncertainty. In addition, in accordance with emerging literature in the Transaction Cost Economics logic (Leiblein & Miller, 2002; Jacobides, 2005) the findings highlight the role of firm capabilities. The dissertation attempts to contribute to the strategy literature by explicating the importance of nature of complementary products, so far not addressed in traditional TCE work.Ph.D., Business Administration -- Drexel University, 201