Strategic Manufacturer Response to a Dominant Retailer

Geylani, Tansev; Dukes, Anthony J.; Srinivasan, Kannan
March 2007
Marketing Science;Mar/Apr2007, Vol. 26 Issue 2, p164
Academic Journal
The growing dominance of large retailers has altered traditional channel incentives for manufacturers. In this paper, we present a theoretical model to illustrate a strategic manufacturer response to a dominant retailer. In our model, a dominant and a weak retailer compete for the sale of a single product supplied by a single manufacturer The dominant retailer has the power to dictate the wholesale price, but the manufacturer sets the wholesale price for the weak retailer. The manufacturer also has partial ability to transfer demand between retailers. In the strategic manufacturer response, the manufacturer begins by raising the wholesale price for the weak retailer over that for the dominant retailer This makes the weak retailer the high-margin channel. The manufacturer then transfers demand to the weak retailer by engaging in joint promotions and advertising. We then use this strategic response model to derive a testable hypothesis that may guide future research in determining the source of dominant retailers' low prices.


Related Articles

  • T.J.Maxx, Marshalls Pair up to "Intervene" on Shoppers' Poor Spending Habits.  // Home Textiles Today;5/18/2009, Vol. 30 Issue 12, p7 

    The article reports that T. J. Maxx and Marshalls have teamed up to develop the National Spending Intervention Integrated program, a national campaign to educate consumers on their spending habits. T. J. Maxx and Marshalls spokesperson Laura McDowell relates that both companies encourage...

  • SOHO-HO-HUM. Butler, Elisabeth // Crain's New York Business;1/10/2005, Vol. 21 Issue 2, p3 

    This article reports that Alice Underground, a famous vintage store at 481 Broadway, New York City is closing its doors this month after more than 20 years in business. The increasing number of discount chains are attracting a new type of customer, and the SoHo artists who formerly patronized...

  • Ruler Foods Plans Champaign Entry.  // Supermarket News Expert Blog;12/21/2012, p3 

    The article reports that Kroger's Ruler Foods discount format will open a store in Champaign, Illinois after it signed a lease for 20,437 square feet at Champaign Town Center.

  • 1/2 Price grows `large' in St. Louis. Goldgaber, Arthur // Discount Store News;10/16/95, Vol. 34 Issue 20, p8 

    Reports on the opening of a new 1/2 Price Stores in Saint Louis, Missouri. Description of the store location; Challenges in the Saint Louis market; Features of the grand opening.

  • Specialty watch.  // Discount Store News;5/20/96, Vol. 35 Issue 10, p6 

    Reports on developments about discount stores in the United States for the week ending May 20, 1996. Includes Old America Stores' purchase of Amber's Stores craft chain; Expansion plan by Garden Ridge; Increase in sales at OfficeMax for first quarter ended April 27, 1996.

  • Big-box stores fight back. Miller, Valerie // Las Vegas Business Press (10712186);8/15/2011, Vol. 28 Issue 33, pP19 

    The article reports on the response of discount retailers to the emergence of dollar stores.

  • Wal-Mart helps out the sun.  // Chain Store Age Executive with Shopping Center Age;Jan1994, Vol. 70 Issue 1, Partnerships for... p10B 

    Reports on the creation of a prototype `green store' by Wal-Mart in Lawrence, Kansas which would be the showplace for environmentally friendly construction. Installation of skylights; Development of system that would provide consistent store illumination.

  • Dollar stores look to cash in. Parish, Linn // Journal of Business (10756124);10/24/2002, Vol. 17 Issue 22, pA1 

    Reports on the expansion of discount retailers in the Spokane, Washington market in 2002. LOI Distributing Co.'s operation of its outlets under the Dollar Store name; Greenbacks Inc.'s operation of Greenback All-a-Dollar store chain; Stores to be added by Your Dollar Store With More Inc.;...

  • Big Crazy Discount Store.  // Asian Pacific Post;6/20/2013, p6 

    A review is offered for the Big Crazy Discount Store in Richmond, British Columbia.


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics