TITLE

CHANNEL COORDINATION MECHANISMS FOR CUSTOMER SATISFACTION

AUTHOR(S)
Wujin Chu; Desai, Preyas S.
PUB. DATE
September 1995
SOURCE
Marketing Science;1995, Vol. 14 Issue 4, p343
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
We consider two broad categories of incentives by which a manufacturer can motivate its retailers to provide high customer satisfaction: (1) manufacturer assistance that reduces the retailer's cost of providing customer satisfaction (CS assistance); and (2) customer satisfaction index (CSI) bonus. We show that if a retailer has a long-term orientation, CS assistance is a more effective coordination mechanism that induces the retailer to expend more effort at customer satisfaction. However, if the retailer has a short-term orientation, CSI bonus is a more effective coordination mechanism. We then show that a long-term oriented retailer is more valuable to a manufacturer than a short-term oriented one. Finally, we show that the use of CS incentives results m greater profits for both the manufacturer and the retailer. (Channels of Distribution, Customer Satisfaction, Incentives, Game Theory)
ACCESSION #
4473061

 

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