Can a weak retailer benefit from manufacturer-dominant retailer alliance? |
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| Authors: | Nawel Amrouche Ruiliang Yan |
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| Institution: | 1. School of Business, Public Administration and Information Sciences, Long Island University 1, University Plaza Brooklyn, NY 11201, USA;2. Department of Marketing & Management, College of Business & Entrepreneurship, Texas A&M University Commerce, TX 75428, USA;1. Professor of Consumer Sciences, School of Human Ecology, 2135 Nancy Nicholas Hall, 1300 Linden Dr., Madison, WI 53706, United States;2. The Norton School of Family & Consumer Sciences, 650N. University of Arizona, Tucson, AZ 85721-0078, United States;3. School of Business, Indiana University Southeast New Albany, IN 47150, United States;1. SKEMA—Univ Lille Nord de France, F-59000 Lille, France Skema Business School, Avenue Willy Brandt Euralille 59 777, France;2. N322, Schulich School of Business, York University, 4700 Keele Street, Toronto, ON, Canada M3J 1P3;1. SKEMA—Univ Lille Nord de France, F-59000 Lille, France. Skema Business School, Avenue Will Brandt Euralille 59 777, France;2. Fox School of Business, 1801 Liacorus walk, PA 19122, USA;1. College of Business, Central Washington University, 20000 68th Avenue W, Lynnwood, WA 98036, USA;2. Whitman School of Management, Syracuse University, 721 University Avenue, Syracuse, NY 13244-2450, USA;1. Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden;2. Center for Retailing, Stockholm School of Economics, Sweden |
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| Abstract: | The paper provides a framework to help the weak retailer delineate the circumstances that allow him to benefit from an alliance between the dominant retailer and the common manufacturer. We use a game-theoretic model to determine the optimal pricing and service strategies when channel members act independently then when the dominant retailer forms an alliance with the manufacturer. We find that: (i) the alliance is formed only if the market is not strongly competitive in terms of price, (ii) differentiation in terms of price and service is beneficial to all channel members under alliance, (iii) an interaction between spillover and service effects plays a crucial role to make the weak retailer gain or lose from the alliance. |
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