Manufacturers of consumer packaged goods invest heavily in trade promotions (i.e., temporary wholesale price discounts), but retailer stockpiling often yields trade promotions unprofitable. In this paper, we investigate how a manufacturer should respond to the retailer's and consumers' stockpiling ability by contracting with the retailer. Specifically, we examine when the manufacturer should restrict the retailer's stockpiling ability and when it should issue trade promotions. Our analysis suggests that: First, the manufacturer should restrict the retailer's stockpiling ability when the storage cost is low. Such restriction also benefits the retailer, resulting in a win-win outcome. Second, the manufacturer should offer trade promotions when the retailer cannot stockpile products and the storage cost is low but raise wholesale price when the retailer can stockpile products. Third, stockpiling by either the retailer or consumers alleviates the double marginalization problem and increases the manufacturer's profit. The manufacturer should design products that are more storable. |
Krista J. Li (李娇阳) 是印第安纳大学凯利商学院的市场营销学副教授和Weimer学者。她在耶鲁大学获得了国际关系与经济学硕士学位，并在德克萨斯A&M大学获得了市场营销博士学位。 李教授从事行为定价，产品设计，市场渠道，和行为博弈论的研究。她的研究在Marketing Science, Management Science, Journal of Marketing Research, Journal of Marketing, Manufacturing and Service Operations Management, Production and Operations Management, Strategic Management Journal, International Journal of Research in Marketing, 和Decision Sciences等国际期刊发表。她是Marketing Science副总编，Journal of Marketing Research和Decision Sciences审稿委员会委员。李教授于2021年被选为Science Institute青年学者, 是一项授予将来市场营销学术领导人物的殊荣。 |
