Optimal Bundling And Store-brand Introduction Strategy From The Perspective Of Supply Chain

It has received more and more attention from scholars to study the interface of operations management and marketing.This thesis studies the interaction between supply chain contract and marketing strategy.We consider two different supply chains,traditional reselling supply chain and agency-selling supply chain.Besides,two different marketing strategies,bundling strategy and store-brand strategy are considered in this thesis.Firstly,this thesis studies the impact of the retailer’s ability to convey a commitment about whether to use bundling on its bundling strategy in the traditional reselling supply chain.We consider a downstream retailer who sells two products from the upstream manufacturers under a wholesale-price contract.We start with a gametheoretical model where the two products are provided by one manufacturer.We find the retailer will never use bundling if the retailer has no commitment ability.However,the retailer will commit to bundling if and only if the costs of two products are relatively low when the retailer has the commitment ability.This is because the commitment ability can alleviate the vertical conflict between the retailer and the manufacturer.Besides,the retailer’s commitment ability can improve the profits of the manufacturer and retailer when the costs of two products are very low.Then we extend our model considering the two products are provided by different manufacturers.The retailer will never use bundling regardless of the commitment ability,because of the horizontal conflict between the two manufacturers and the vertical conflict between the retailer and the manufacturers.Secondly,this thesis considers the bundling strategy problem in the agency-selling supply chain.Bundling strategy has been widely adopted by retail platforms under agency selling where the manufacturers pay a commission fee to the platform to gain access and sell directly to consumers.We consider a retail platform through which two independent manufacturers distribute their products.The manufacturers first set their product prices,subsequently,the platform decides whether to offer the bundled product and the price of the bundled product if it is offered.By analyzing a two-stage Stackelberg game,we find that the platform adopts the bundling strategy only when the manufacturers’ product prices are high and the commission rate is high.Additionally,the manufacturers strategically set high prices to induce the platform to offer the bundled product when the costs of two products are both medium or one cost is high and the other is medium.Consequently,having the bundling option may hurt the platform’s profit and the consumer welfare,but it would always benefit the upstream manufacturers.Finally,this thesis studies the downstream retailer’s store-brand introduction problem in the tradition reselling supply chain and agency-selling supply chain.In the tradition reselling supply chain where wholesale-price contract is used,the downstream retailer first determines whether to introduce the store-brand and then the upstream manufacturer sets the wholesale price.After that,the downstream retailer sets the retail price for the national-brand and the price for the store-brand when the store-brand is introduced.This research finds that the retailer introduces the store-brand only when the costs of products are low or the quality of the store-brand is high.Besides,the retailer’s store-brand introduction is harmful to the manufacturer,but benefits the consumer and the total supply chain in a traditional reselling supply chain.This is because the storebrand introduction brings competition and weakens the double-marginalization effect in the supply chain.In the agency-selling supply chain where revenue-sharing contract is used,the upstream manufacturer can set the retail price for the national-brand and the downstream retailer shares a fixed proportion of the total revenue of the nationalbrand as commission income.In addition,the retailer can decide the retail price for the store-brand if the retailer chooses to introduce the store-brand.The results show that the store-brand introduction is harmful to the manufacturer and the total supply chain,but benefits the consumer in the agency-selling supply chain.The store-brand introduction can result in the price competition between the manufacturer and the retailer,and thus reduce the performance of the total supply chain.With above research findings,this thesis makes contributions from the following three aspects:(1)There is little research that considers the impact of the retailer’s commitment ability on the retailer’s bundling strategy in a traditional reselling supply chain.Our work considers the retailer’s commitment ability and finds that the commitment can can alleviate the vertical conflict between the retailer and the manufacturer,and thus benefit both the manufacturer and the retailer when the two products are provided by one manufacturer.(2)Although the agency-selling supply chain has received considerable attention,there is little research that considers the retail platform’s optimal bundling strategy in an agency-selling supply chain.Unlike traditional reselling,the manufacturer,rather than the retail platform,determines the retail prices under agency selling.Our results show that the manufacturers may strategically set the retail prices to induce the platform to offer the bundled product.Additionally,the retail platform’s bundling option may hurt the platform.(3)In the research of the retailer’s store-brand introduction strategy,there is little literature that considers the interaction between supply chain type and the retailer’s store-brand introduction strategy.This thesis analyzes the retailer’s optimal store-brand introduction strategy in two different supply chains,traditional reselling supply chain and agency-selling supply chain.We find that the store-brand introduction improves the performance of the supply chain in a traditional reselling supply chain while the store-brand introduction hurts the supply chain efficiency in an agency-selling supply chain.