Manufacturer-retailer Relationship Research Articles

Retain or Reduce? Delisting Decisions in Relation to Manufacturer-Retailer Relationships in Grocery Store Retailing

Retain or Reduce? Delisting Decisions in Relation to Manufacturer-Retailer Relationships in Grocery Store Retailing

Manufacturer–Retailer Relationships and the Distribution of New Products

This paper presents empirical evidence and develops a repeated-game model for manufacturer–retailer relationships and demonstrates that these relationships limit the impact of regulations.

Cooperative advertising in manufacturer-retailer relationships with considering inventory costs

Cooperative advertising in manufacturer-retailer relationships with considering inventory costs

Retailer Segmentation as A Strategy for B2B Marketing using A Two-Level Clustering Analysis

This paper aims to explore the possibility of identifying retailer segments. Data is the foundation of segmentation that helps identify the critical value drivers, select the appropriate engagement level and decide the retailer engagement. This study proposes a new approach that considers two-stage clustering for retailer segmentation and behavioural analysis among building materials companies in Indonesia. The alignment could provide a practical managerial approach to finding competitive advantage and a better understanding of sales opportunities. Retailer segmentation can be done differently from the most relevant sales perspective. In this study, we propose an alternative method for retailer segmentation based on two-stage clustering. First, segmentation is based on three categories of the size of order: a very potential group of customers in which the order size is large, a middle group and a group where the order size is small. Second, segmentation based on personal value is a relational perspective that considers the behavioural analysis from the manufacturer-retailer relationship.

Hierarchy Structural Model of B2b Marketing Strategic In Manufacturer-Retailer Relationship Using Analytical Hierarchy Process (AHP)

The business environment is undergoing dynamic changes such as the increased competition and the development of new technologies. Companies have been increasingly interested in improving their business performance. In the literature on B2B markets there is a high-level agreement that principal's performance can be improved towards holding fewer and closer relationships. Increasing long term relationships represents a starting point for competitive advantage. Research and practice on marketing channel management have proven the importance of managing relationships between people or organizations which is carry out the distribution function (Stern, Louis W and Weitz, 1997). A value has always been the fundamental basis for all marketing activities (Palmatier, 2008). In fact, it is essential to know how to create and deliver value in the relationship, from both point of view, the manufacturer and retailer (Ulaga and Eggert, 2005). The main objective of this research is to obtain a clearer picture of the problems of the situation in the relationship between principal and retailer and plan a collaborative relationship strategy. Analytical Hierarchy Process (AHP) approach used to determine priorities from various alternatives strategies. The most important thing is to determine the priority order of strategies and formulate policies concerning business competition. This study's managerial implication implied that workers and business actors, and policymakers in the trade sector in the paint and building materials industry could get a rich picture of creating an ideal competitive situation between small and medium business owners and retail network businesses. Keywords: Analytical Hierarchy Process, B2B Relationship, Collaboration, Retailer, Strategy

Manufacturer-Retailer Relationships and the Distribution of New Products

Manufacturer-retailer relationships are often cited as an important determinant in product distribution. By coordinating the channel and aligning incentives, relationships can significantly affect both manufacturers’ and retailers’ profits and contribute to market concentration. However, empirical evidence is scarce because relationships are usually trade secrets. I study how beer manufacturers leverage their relationships with retailers to promote new products in the U.S. hard cider market. I present novel empirical evidence of mutual preferential treatments between manufacturers and retailers in assortment choices and wholesale pricing. I interpret the finding as pair-specific relationships sustained through repeated interactions, and use industry regulations on trade and wholesale pricing to address alternative mechanisms, including non-linear contracts. I estimate a structural model of consumer demand, retail and wholesale pricing, and assortment that incorporates the relationships. The results show that the relationships increase Anheuser-Busch InBev’s and MillerCoors’ new cider availability by 17.7% and 7.2%, respectively, and present a double win to both the manufacturers and retailers.

The coincidence of private branding and foreign sourcing: Is there a causality direction?

Private branding, a retail trend whereby products made by unaffiliated manufacturers are sold under the private brands owned by retailers, has coincided with another trend known as foreign sourcing, whereby retailers outsource products from foreign manufacturers. Prior studies have tended to treat private branding and foreign sourcing as two separate trends without paying much attention to their coincidence. In this paper, we take a transaction cost approach to explore why the two retail trends coincide and whether there is a causality direction between them. Focusing on the manufacturer-retailer relationship, we point out that a special case of asset specificity (i.e., brand specificity) can drive up the costs of intra-channel transactions in foreign sourcing, in that private branding serves to neutralize the transaction cost disadvantage of foreign manufacturers and preserve their production cost advantage. Empirical data drawn from a multi-product/single-retailer sample confirm this transaction cost view and reveal a clear causality direction between the two retail trends. Both scholars and managers can derive useful insights from the conceptual framework and empirical evidence presented in this paper.

Outsourcing, information symmetry and governance

PurposeThe purpose of this paper is to examine the effects of retailers’ organizational controls and controls of their boundary personnel on manufacturers’ outsourcing performance. It further assesses the moderating impact of information symmetry in this context.Design/methodology/approachData were collected from 230 Indian apparel manufacturers engaged in outsourcing activities with two international retailers. Organizational control is scrutinized as formal and informal controls, and outsourcing performance is studied in terms of efficiency and effectiveness. The partial least squares approach is used to test the proposed research model.FindingsFirst, the retailers’ and the boundary person’s formal controls have a direct, positive effect on outsourcing efficiency. Second, although no significant effect of the boundary person’s formal controls on outsourcing effectiveness is identified, a significant effect of retailers’ formal controls on effectiveness is seen. Third, the boundary person’s informal controls are associated with a decrease in efficiency, whereas they have a positive effect on effectiveness. Fourth, although the retailers’ informal controls enhance outsourcing effectiveness, they negatively affect efficiency. Fifth, information symmetry is statistically significant in enhancing outsourcing efficiency and effectiveness.Practical implicationsThe results have important implications for retailers and retailers’ boundary persons who are keen to improve their relations with manufacturers. This paper offers practical insights into the ways that manufacturers, boundary personnel and retailers can exercise control mechanisms in order to achieve effective and efficient outsourcing outcomes.Originality/valueThe effect of organizational control and information symmetry on outsourcing performance in typical outsourcing practices in manufacturer‒retailer relationships is shown.

Optimal replenishment cycle for perishable items facing demand uncertainty in a two-echelon inventory system

We consider a two-echelon supply chain with an upstream manufacturer and a downstream retailer for a single perishable product. The manufacturer processes raw materials into finished products, which are purchased by the retailer in each replenishment cycle. The raw materials of the manufacturer are highly perishable (i.e. perishing within hours or days), and the finished goods at the retailer face demand uncertainty and obsolescence. We model the manufacturer–retailer relationship as a Stackelberg game where the retailer is the leader and decides the replenishment cycle that minimises its mismatch cost between supply and uncertain demand. The manufacturer is the follower and decides its processing rate to minimise its unit cost for finished goods. Our results show that the raw material and finished goods lifetimes, which are interrelated through the duration of the replenishment cycle, have a significant impact on supply chain costs. Although raw material spoilage cost by itself is low, we show that short raw material lifetimes have a significant impact on the costs of both parties. Additionally, we find that while high manufacturer markups increase retailer costs, they reduce the manufacturer's costs due to large production batches.

Reciprocal value sharing in manufacturer-retailer relationships: the case of new product introductions

Prior literature examined reciprocity in the context of value creation. However, research has yet to examine whether reciprocity exists in value sharing. To address this gap, the authors examine retailer’s reciprocal value sharing with its manufacturer in relation to new product introductions. The authors test, via a survey of retail managers, whether reciprocal value sharing is influenced by an interaction of manufacturer’s prior new product success with innovativeness of a manufacturer’s products and the frequency of new product introduction. The results indicate that a retailer’s reciprocal value sharing is greater when the manufacturer historically launched successful new products, and that this effect is decreased with the innovativeness of a manufacturer’s products but increased with the frequency of new product introduction.

Cadbury and the rise of the supermarket: innovation in marketing 1953–1975

This article uses company archival data, supported by evidence from the trade press, to examine the development of the manufacturer–retailer relationship in the case of Cadbury and the supermarket retailers distributing its products in the period 1953–1975. It reveals the influence upon Cadbury’s marketing strategies and practices of the increasing importance of supermarket retailing in relation to the confectionery as well as the grocery goods trades. It also provides new insight into the significance of these changes for Cadbury’s relationships with other manufacturers, and with small-scale retailers typified by confectioners, tobacconists and newsagents.

The Power of Innovativeness in Manufacturer–Retailer Relationships

ABSTRACTPurpose: Retailers often challenge manufacturers through aggressive store brand policies and severe listing constraints. This study investigates manufacturer innovativeness as a managerial lever to shift the power balance between manufacturers and retailers.Methodology/approach: Using data from 277 senior managers of Swiss and German consumer goods manufacturers and analyzing these data with structural equation modelling, the authors test hypotheses about the impact of manufacturer innovativeness on manufacturer–retailer relationship characteristics (i.e., retailer dependency, store brand aggressiveness, and listing constraints).Findings: The study demonstrates that manufacturer innovativeness enhances retailer dependency, which in turn positively affects overall manufacturer performance. This relationship can be explained further: By increasing retailer dependency, manufacturers suppress retailers’ store brand aggressiveness and attenuate retailers’ listing constraints. Store brand aggressiveness affects overall manufacturer performance through listing constraints.Research implications: Identifying levers such as innovativeness that assist manufacturers in fostering their power over retailers provides a new mode for understanding how manufacturers can influence the balance of power between manufacturers and retailers. The study provides support for the approach/inhibition theory of power on the inter-organizational level. Organizations with increased power are assumed to have approach-related tendencies and act in goal-consistent manner, whereas organizations with reduced power are assumed to develop the tendency to pursue inhibition-related actions, e.g., attending to threats. Furthermore, this study identifies channel relationship characteristics such as retailer dependency as a mediating path between manufacturer innovativeness and performance.Practical implications: Managers need to strengthen the firm’s innovative capacity to enhance the performance of their companies. By developing the capability to provide radical innovations, manufacturers are able to enhance their performance not only directly but also indirectly by strengthening the manufacturer’s position with regard to retailers. This study underscores the relevance of innovativeness for strengthening the manufacturer’s position in its relationship with retailers that avoids problems with aggressive store brands and constrained listing conditions.Originality/value/contribution: This study proposes manufacturer innovativeness as a managerial lever to shift the power balance between manufacturers and retailers.

Black and White Thinking in the Gray Areas of Antitrust: The Dismantling of Vertical Restraints Regulation

In this Article I present a two-pronged analysis of vertical restraints, one in law and one in economics. By tracing the checkered legal history of vertical restraints, I show the marked changes recent antitrust decisions have wrought, in particular, by comparing the legal standards expressed by the Supreme Court in Monsanto Co. v. Spray-Rite Service Corp. with those in Business Electronics Corp. v. Sharp Electronics Corp and Atlantic Richfield Co. (ARCO) v. USA Petroleum Co. If through the latter two cases the Court has, for all practical purposes, created a category of per se legality for vertical price restraints, which I believe to be the case, then it would not be unreasonable to expect the Court to proceed in the same fashion with respect to vertical non-price restraints in the future. After assessing the current legal status of vertical restraints through market analyses, I demonstrate that the economic reasoning justifying their per se legal treatment is not as compelling as previously believed. I show this in two respects. One evaluation stems from recent advances in economic theory exploring the dynamics underlying the manufacturer's decision process when selecting a method of product distribution. By drawing on those developments, I identify market scenarios not previously considered, in which the anticompetitive effects of vertical price restraints on certain distribution strategies raise new and legitimate antitrust concerns. A second inquiry reexamines the economic issue that initially gave rise to arguments in favor of the legalization of vertical price restraints, that is, the phenomenon of price-discounting retailers who are also free riders.Some commentators have argued that manufacturers should be able to impose vertical price restraints to protect against the dealer erosion that free-riding precipitates. Reaching a different conclusion, this Article demonstrates that either the manufacturer can achieve those same ends through less trade-restrictive business methods that may, in addition, enhance consumers' satisfaction, or, that the strategies themselves, from an economics perspective, are not worthy of protection. Together, both economic analyses, that of the manufacturer's distribution choices and that of the free rider phenomenon, signify that unfettered freedom for manufacturers to impose whatever vertical arrangements they choose actually can foster lower efficiency levels and consumer welfare, the primary economic measures used to evaluate antitrust policy. These results are at variance with those of the Chicago School and indicate the need for more subtle, yet well-defined, antitrust treatment of vertical restraints than per se legal rules offer. Moreover, the conclusions of this Article's market evaluations also demonstrate that the rigidity created by per se illegal treatment of vertical price restraints lowers consumer welfare as well, when applied to certain commonly occurring manufacturer-retailer relationships. Given that neither per se illegal nor per se legal rules for vertical price restraints have the flexibility to make the crucial distinctions between a manufacturer's pro- and anticompetitive conduct, this Article argues for the application of a rule of reason standard that incorporates those features of market structure that economic reasoning indicates will ensure procompetitive impact.

Antecedents and Consequences of Sales Personnel Dispatch on Manufacturer-Retailer Relationship

소매과점화 현상은 제조업체의 대형유통업체에 대한 의존성을 심화시키고, 제조업체의 힘의 약화를 가져오며, 그로 인해 유통경로 상에서 다양한 갈등문제를 유발할 수 있다. 소매과점화에서 시작된 갈등 중 대표적인 것으로 제조업체와 대형유통업체간의 판매사원 파견에 대한 입장 차이를 들 수 있다. 판매사원 파견이 증가함에 따라 제조업체와 유통업체 간의 대립은 심해지고 있다. 이에 따라 본 연구는 제조업체의 대형마트 판매사원 파견의 원인을 설명할 수 있는 두 가지 이론을 제시하고, 판매사원의 파견이 제조업체의 성과에 미치는 영향을 규명하고자하였다.BR 제시된 모델을 실증하기 위하여 가전제품, 식음료, 생활용품 산업에서, 15개 기업의 마케팅 담당 직원을 대상으로 데이터를 수집하였다. 실증결과 자원의존이론 관점에서 선정한 채널유대는 제조업체의 판매사원 파견에 영향을 미치는 것으로 나타났으며, 제조업체의 브랜드 평판과 제품의 복잡성이 채널유대에 영향을 미치는 것으로 나타났다. 힘-의존이론 관점에서 선정한 유통업체 대체가능성 역시 판매사원 파견에 영향을 미치는 것으로 나타났으며, 제조업체의 경쟁강도와 수요의 변동성이 유통업체 대체가능성에 영향을 미치는 것으로 나타났다. 또한 제조업체의 판매사원 파견은 제조업체의 전반적인 성과에 영향을 미치는 것으로 나타났다.BR 본 연구가 이론적, 실무적으로 기여하는 점은 다음과 같다. 첫째, 국내유통환경에서 큰 이슈가 되고 있는 판매사원 파견에 대해 단순히 제조업체와 유통업체의 입장정리가 아닌 이론을 토대로 한 실증연구를 시도했다는 점이다. 둘째, 판매사원 파견을 제조업체와 유통업체의 공동활동으로 간주한다면, 다양한 관점에서 새로운 연구가 가능할 것이라는 점에서 향후 연구를 위한 시발점이 되었다는 점이다. 마지막으로 판매사원 파견에 대하여 제조업체와 유통업체가 상생할 수 있도록 합리적인 정책을 수립할 필요가 있음을 제시하였다.

Developing a New Theory of Frontline Manufacturer-Retailer Relationships for Consumer Packaged Goods

ABSTRACTPurpose: Frontline employees from consumer packaged goods (CPG) manufacturers, and the retailers’ employees who they interact with, play a crucial role in the in-store execution of product promotions and in ensuring that products are available for shoppers. This article investigates the development of interpersonal relationships between these frontline actors at the store-level of analysis and how these relationships influence in-store processes. We consider the theoretical and practical implications of our findings for sales force recruiting and sales management in the CPG retail channel.Methodology/approach: Frontline relationships and in-store execution remain relatively under researched fields in the sales management and retail literatures. Given the lack of a well-established theoretical framework, we conducted a qualitative study in the grounded theory research tradition. We interviewed frontline personnel from manufacturers and retailers, their immediate managers and headquarters personnel and other industry experts. We took a holistic approach to data collection; also gathering other types of written, photo and video data for the purpose of iterative data analysis and developing a mid-range theory of relationship development between manufacturer representatives and retailer employees, the frontline employees tasked with executing marketing and merchandising strategies in the store.Findings: We develop a model of frontline relationship development and performance consisting of 4 distinct stages: (1) working alongside, (2) building respect, (3) cooperative relationship (helping hands), and (4) collaborative partnership. We compare our findings with existing relationship marketing and relationship management theories. We find that an alternative theoretical framework may suit the particularities of the CPG retail channel better.Research implications: This article provides insight into a very specific but important type of business-to-business relationships in the CPG retail channel that have seen little scholarly attention. It calls for re-evaluating the relevance of existing relationship marketing and sales management paradigms in the CPG retail channel. Future research could investigate the extent to which our model is applicable in sales environments beyond the CPG retail channel.Practical implications: The study’s findings contribute to the practice of relationship marketing and sales management in the CPG retail channel. We present a case for a different approach of managing manufacturer-retailer relationships at the store level, a more functional tactic, which seems to deliver higher relationship performance than expected under the relationship marketing paradigm prevalent in sales and retail literatures. This different approach has direct consequences for the recruitment and management of a CPG sales force.

The Impact of Relational Marketing Bonds on Retailers' Economic and Social Satisfaction

In the literature on channel relationships, there is a complex and hostile relationship between manufacturers and large retailers, especially given the growing strength of retail organizations in the global context. This study thus examines (a) the impacts of relational marketing bonds on economic and social satisfaction and (b) the role of economic satisfaction in the relationships between relational marketing bonds and social satisfaction in the manufacturer–retailer relationship. This quantitative study presents empirical findings from a survey of 140 large retailers using partial least squares. The results revealed that organizational bonds, but not interpersonal bonds, were crucial in affecting retailers' economic satisfaction. Meanwhile, interpersonal bonds were crucial in affecting retailers' social satisfaction. The results also provided strong evidence of the relationship between retailers' economic and social satisfaction as well as the crucial role of economic satisfaction as a mediator between organizational bonds and social satisfaction. Theoretical and managerial implications are extracted from these findings.

Le poids du critère logistique dans les procédures de sélection des fournisseurs : Application à la grande distribution alimentaire

Manufacturer-retailer relationships are a hot topic in France. Many studies have addressed this issue through the singular focus of trade negotiations but it does not hold true as far as logistics is concerned. The article questions the real importance of the logistical service in listing strategies currently deployed by retailers vis-à-vis their upstream markets.

Salesperson Slotting Allowance Authority in Manufacturer-Retailer Negotiations

Over the past 30 years, slotting allowances have played an important, albeit contentious, role in manufacturer-retailer relationships. As the debate over this practice continues, little attention is being paid to the role of salespeople in slotting allowance negotiations. The current study addresses this shortcoming in the literature by investigating the delegation of slotting allowance authority to salespeople in the context of manufacturer-retailer negotiations. A structural model is tested using data collected from retail managers. The analysis indicates that delegating slotting allowance authority to salespeople positively impacts the salesperson's influence over customer decisions and enhances selling performance. The results also suggest that a salesperson's trustworthiness increases his or her influence and performance with the customer. Overall, the findings suggest that manufacturers are likely to benefit from delegating slotting allowance authority to the sales force and training salespeople to convey this authority during retail negotiations. The study concludes with a discussion of implications for theory and practice.

The Effect of Use of Power in Buyer-Seller Relationships: An Investigation on the Firm Size Dependency

This study aims to introduce the effects of power use on firm performance in manufacturer-retailer relationships. Furthermore, this study will investigate the moderating role of the firm size of channel members between power use variables and firm performance. The data was collected from the 400 manufacturer firms of the supplier-retailer relationships. The conceptual framework is evaluated by exploratory factor analysis and multiple regression analysis using SPSS 15.0. The findings indicate that both expert and market power dimensions of power use have a significant and positive effect on firm performance. Additionally, the moderating effect of firm size is significant when it interacts with expert power on firm performance. Therefore, as long as the firm size (in terms of turnover) grows the expert power affect on firm performance decreases.

Brand management and the marketing mix model

Brand management is typically defined as the way in which brands are positioned in the marketplace, both in terms of tangibles such as price, packaging and the marketing mix and intangibles such as consumer perceptions and brand equity. The conventional marketing mix model is often used to inform the tangible elements, but is lacking into two key aspects. Firstly, it ignores the role of intangibles. Secondly, the focus is solely on individual brands in isolation. This ignores the wider competitive context, where the decision to choose one brand is the simultaneous decision not to choose another. Successful brand management, however, requires a simultaneous holistic view of all players. To address both issues, this article argues for a dynamic time series version of the discrete choice attraction model. Firstly, the demand system structure treats the entire category as a single unit, capturing competitive steal, cannibalisation, halo and category expansion effects of brand-specific marketing. This provides accurate marketing return on investment and budget allocation, facilitating the manufacturer-retailer relationship. Secondly, the time series approach allows us to quantify the evolution and drivers of consumer brand tastes – critical to understanding brand intangibles. This enables managers to set marketing strategy for optimal long-term brand performance.