Collaborative Promotions (eBook)

Foreword 8
Acknowledgements 10
Contents 12
List of Figures 16
List of Tables 18
List of Symbols and Acronyms 20
Chapter 1 Introduction 22
Chapter 2 Promotions and Collaboration in Retailing 26
2.1 The German Market Situation 26
2.2 Promotions 27
2.2.1 Definition and Impact of Promotions 28
2.2.2 Retail Price Formats 29
2.3 Collaboration 31
2.3.1 Collaborative Planning Forecasting and Replenishment 31
2.3.2 Pros and Cons of CPFR 33
2.3.3 The Competition Index 34
2.4 Research Questions and Methods 36
Chapter 3 Literature Review 38
3.1 Customer Demand in Promotions 38
3.1.1 Stockpiling 39
3.1.2 Brand and Package Size Switching 41
3.1.3 Store-Switching 42
3.1.4 Decomposition of Customer Demand in Promotions 43
3.2 Retailer Decisions 44
3.2.1 Promotion Pricing 45
3.2.1.1 Monopolist Retailer 45
3.2.1.2 Competing Retailers 46
3.2.1.3 Competitive Response 50
3.2.2 Retailer Inventory 50
3.3 Supply Chain Collaboration 52
3.3.1 The Value of Information Sharing 53
3.3.1.1 Bullwhip Effect 53
3.3.1.2 Downstream Information 55
3.3.1.3 Upstream Information 57
3.3.2 Information Sharing in a Competitive Environment 59
3.3.2.1 Horizontal Information 59
3.3.2.2 Vertical Information 60
Chapter 4 Retailer Competition 62
4.1 Setup of the Retailer Game 62
4.1.1 Sequence of Events 63
4.1.2 Retailer Promotion Strategies 64
4.1.3 Customer Demand 66
4.2 Optimizing the Retailer's Decisions 68
4.2.1 Newsvendor Problem: The Optimal Order Quantity 68
4.2.2 Nash Equilibrium: The Optimal Promotion Frequency 71
4.2.2.1 Expected Profit in Mixed Strategies 72
4.2.2.2 Best Response 75
4.2.2.3 Symmetric Nash Equilibrium 79
4.3 Information Scenarios 80
4.3.1 Information from the Competition Index 80
4.3.2 No Information Sharing Scenario 82
4.3.3 Information Sharing Scenario 89
4.4 The Value of Upstream Information Sharing 97
4.4.1 Inventory Effect 98
4.4.2 Frequency Effect 101
4.4.3 Profit Effect 105
4.4.4 Customer Welfare 107
4.4.5 Manufacturer Benefits 111
4.5 Extension: Asymmetric Retailers 111
4.5.1 Asymmetric Mixed Strategy Equilibrium 111
4.5.2 The Value of Information Sharing 117
4.6 Summary 117
Chapter 5 Empirical Analysis 119
5.1 The Data Set 119
5.1.1 Description of the Data Set 120
5.1.2 Competitive Landscape 121
5.2 Retailer Strategies 123
5.2.1 Price Ranges 124
5.2.2 Price Levels 125
5.2.3 Retail Price Format 128
5.2.4 Promotion Frequency 129
5.2.5 Strategies of Analyzed Retail Chains 131
5.3 Customer Demand 132
5.3.1 Price Sensitivity of Customer Demand 132
5.3.2 Decomposition of Customer Demand 134
5.3.3 Segmentation-Based Retailer Strategies 136
5.4 Competition Index 138
5.4.1 Order Quantity 139
5.4.2 Competitive Pressure and the Competition Index 139
5.5 The Value of Information Sharing 141
5.5.1 Retailer Benefit 141
5.5.2 Customer Welfare 143
5.5.3 Win–Win–Win Situation 144
Chapter 6 Conclusion and Managerial Insights 146
6.1 Impact of Customer Demand 146
6.2 Strategic Options for Retailers 147
6.3 Improving Supply Chain Efficiency by Collaborative Promotions 148
Appendix A Proofs and Calculations 150
A.1 Best Response for the Scenario No Information Sharing 150
A.2 Best Response for the Scenario Information Sharing 163
References 168