Retailers’ Sales Efforts Under Different Supply Chain Structures

With the increasing complexity of business activities, taking information asymmetric between producers and consumers into account, the manufacturers must pass the product information to the end consumers, in order to attract them to buy the products through promotion activities. Due to the fact that commodity trading happens between retailers and customers directly, the downstream retailers can capture more products demand information compared with the upstream manufacturers. Thus, the retailers’ promotion activities can effectively improve the market demand of the products.The retailer’s promotion behavior already caused widespread concern in industry and academia, but with the deepening of research, we have found that there are three aspects of the problem are still worth discussing. First, if the retailer is fairness sensitive, then how her sales efforts will change compared with the fairness neutral under the single channel supply chain? Second, considering two horizontal competition independent retailers under the dual-channel supply chain, what effects the negative spillover and the consumer loyalty will have on retailers’ promotion? Third, when the horizontal competition between the two offline store turn further into the horizontal competition between the offline store and the online store, how should the offline store’ sales efforts and the retail price adjust to confront the free-riding behavior? No matter for the industry and the academia, there is a strong theoretical and practical significance for these three issues.At first, under the single channel supply chain dominated by the manufacturer, we study the impact of the retailer’s fairness preference on the sales efforts level and the supply chain operation efficiency, and design a profit sharing contract applied with a Nash bargaining process as the coordination mechanism of supply chain. Then, we consider that the supply chain is expanded from the single channel structure to the dual channel structure. We studied the impact of the negative spillover effect and the consumer loyalty on retailer’s promotion and pricing strategies. Finally, the horizontal competition between two the offline store is turned further into the horizontal competition between the offline store and the online store. We analyze the impact of the free-riding behavior on retailers’ promotion and pricing strategies. Then, the manufacturer designed a cost sharing contract as the coordination mechanism to improve the supply chain operation efficiency. The results show that:(1) Manufacturers can encourage a fairness-sensitive retailer to improve the sales efforts level by lowering the wholesale price. The retailers’ fairness preference is conducive to improving his own utility, but will reduce the manufacturer and the supply chain utilities. A reasonable profit sharing contract can improve the utility level of both sides and the supply chain operation efficiency.(2) Under the condition that the two retailers are independent and horizontal competitory, the negative spillover effect and the consumer loyalty have a great impact on sales efforts level and the price strategy of the channel whether in the centralized setting or in the decentralized setting.(3) The price of online store is significantly lower than that of offline store. In addition, the free-riding behavior will significantly reduce sales efforts level and the supply chain profit. Cost sharing contract can lead to Pareto improvement of the supply chain members’ profit, meanwhile will increase the price of the offline store and the online store.