Mail-in-rebate and coordination strategies for brand competition

Abstract

This research investigates the strategic value of combining mail-in-rebate (MIR) and branding coordination strategies in the context of a supply chain composed of a national brand's manufacturer and a traditional retailer. The retailer offers two competing brands: the national brand and his own store brand. As a first step, we examine which party should bear the cost of the MIR promotional strategy and its role as a coordination mechanism to alleviate the brand competition. When there is close positioning of NB and SB's quality and a decent ratio of MIR redemption, our results show that both parties prefer the total control of the retailer over managing the national brand in his store by supporting all the costs of the promotional strategy. As a second step, we examine the role of various structures of coordination mechanisms, and we found that the “combined branding-promotion coordination” is the best option to boost the performance of all supply chain parties at the highest levels.