Analysis of pricing decision for substitutable and complementary products with a common retailer (original) (raw)
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Bundle pricing strategies for two complementary products with different channel powers
Annals of Operations Research, 2017
In this paper, we consider a duopoly market where two manufacturers separately produce and sell two complementary products through a common retailer as a leader-follower movement. The competition has been studied in two-echelon supply chain system and all produced products are sold by the retailer with individual product prices or with pure products' bundling price in the non-cooperative market. The demand of each product linearly depends on prices of these two products as per their nature. Here, model for two different cases (without and with pure products' bundling) are developed mathematically to maximize the profit of each participant of the supply chain and then corresponding optimal pricing strategies are worked out for the manufacturers and retailer. It is shown that supply chain profit for the pure bundling is better than the profit when products are sold at individual prices. Finally, the model is illustrated with numerical data to study the effects of models' parameters in the pricing strategies and some marketing decisions are explored.
Anais da Academia Brasileira de Ciencias, 2016
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International Journal of Production Economics, 2018
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Joint Selling of Complementary Components Under Brand and Retail Competition
Manufacturing & Service Operations Management, 2015
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Article The Equilibrium Decisions in a Two-Echelon Supply Chain
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Scientia Iranica, 2020
During the years of imposed sanctions against Iran, Iran Khodro Company (IKCO) got into a hazardous situation due to CKD parts' purchasing cost increment and emersion of new product variants in the competitive market. To examine such situation, this study examines a multi-period semi-centralized dual-channel supply chain where a common retailer (free market) and two manufacturers' (IKCO and Saipa as a major competitor) direct channels are confronted with reference price dependent and stochastic demand. The problem is analyzed under Stackelberg and cooperative games scenarios using heuristic algorithm and a League Championship algorithm respectively, as solution methods. Results obtained from solving the problem with IKCO data proves higher profitability of the cooperative game and its remarkable resilience for all products' memory types i.e. short/long term memory against production cost disruption which is imposed to IKCO in some periods. Besides calculating Saipa's optimal wholesale price in the disruption periods, our approach with support of experimental analyses is able to assign a supply chain's degree of resilience against disruptions to its product's memory type and also power structure. 1 Introduction In industrial world, considerable increase in number of manufacturers stimulates their concern about continuity and as a result, persuades them to enhance their product to meet customer's preferences and interests. Therefore, the manufacturers should have a close relationship with the customers. Dual-channel supply chain is a kind of supply chain providing this 2 relationship. The dual-channel supply chain, as it is evident from its name, has two selling channels, including retail channel (also known as traditional channel) in which product is offered by retailer and E-direct channel wherein selling of the product is conducted by the manufacturer and ordinarily using internet. Academic researches orientation towards the dualchannel supply chain and using this type of supply chain by top manufacturers of the world like Samsung, HP, IBM, Sony, Dell, Lenovo, Panasonic, and Pioneer Electrics demonstrate the profitability and its vital role in survival of a manufacturer [1]. Some Iranian companies like IKCO, Saipa, Pars Shahab Light Company and Rasa Nour Neishabour Company have two selling channels. Pricing is one of the crucial decisions in the supply chain and is influential in its profitability. There is a strong literature in supply chain pricing field. Due to the fact that most of the researches utilized game theoretical approach, some of them are indicated briefly in this section. Sana et al (2014) studied a three-layer supply chain and considered both collaborative and Stackelberg scenarios [2]. Modak et al (2016) studied a closed loop supply chain and considered cooperative and Stackelberg games scenarios that in the stackelberg game, the retailers' competition was modeled under Cournot and collusion games [3]. Modak et al (2016) investigated a supply chain wherein they considered manufacturer-led Stackelberg vertical game in which the retailers have three different behaviors namely Cournot, Collusion and Stackelberg. They utilized all units discount contract with franchise fee as a channel conflict respondent [4]. Sana et al (2017) considered knowledge management approach in agro-industrial supply chain of cocoa wherein they took into consideration collection centers-led Estackelberg and collaboration scenarios [5]. Modak et al (2018) considered a two-echelon closed loop supply chain in which in addition to considering three possible collection activities of used product for recycling namely retailer led collection, manufacturer led collection and third party led collection, they introduced the concept of sub-game perfect equilibrium and alternative offer bargaining strategy to resolve the channel conflict and distribute surplus profit [6] Roy et al (2018) studied a two-echelon supply chain and obtained optimal order quantity under Estackelberg, Bertland, Cournot-Bertland and integrated scenarios [7]. It is worth mentioning that, the importance of pricing in the dual-channel supply chain is higher than the one-channel supply chain due to the existence of price competition that generates channel conflict. Multiplicity of the channel conflict-related researches in the literature proves the critical importance of this field. These researches have analyzed the channel conflict and introduced some strategies to decline the effects of the conflict, additionally. The strategies are divided into two groups, including use of contracts and improvement of sales services as well as customer loyalty. In the first group, Tsay and Agraval (2004) utilized game theory to examine the channel conflict and coordinate the chain members as well [8]. Mukhapaday (2006) instituted profit sharing contract while the retailer has the ability to add on some values to the product