Motivating Retail Marketing Effort: Optimal Contract Design

• 成果类型: Article
• 署名作者: Mukhopadhyay, Samar K.; Su, Xuemei; Ghose, Sanjoy
• 署名单位: Sungkyunkwan University (SKKU); California State University System; California State University Long Beach; University of Wisconsin System; University of Wisconsin Milwaukee
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/j.1937-5956.2009.01014.x
• 发表日期: 2009
• 页码: 197-211
• 关键词: sales agent; retail contracts; distribution channel; supply chain; game theory

摘要

We study a distribution channel where a manufacturer relies on a sales agent for selling the product, and for investing in the most appropriate marketing effort. The agent's effort is hard to monitor. In addition, the cost of effort is the agent's private information. These impose challenges to the manufacturer in its endeavor to influence the agent's marketing effort provisions and to allocate profit between the two parties. We propose two contract forms. The franchise fee contract is a two-part price schedule specifying a variable wholesale price and a fixed franchise fee. The retail price maintenance contract links the allowed retail price that the agent charges customers with total payment to the manufacturer and sales level. Under information asymmetry, for implementing either contract form, the manufacturer needs to offer a menu of contracts, hoping to invoke the revelation principle when the agent picks a certain contract from that menu. We show that the two contract forms perform differently, and each party's preference toward a particular contract form is linked with the total reservation profit level and/or the sales agent's cost type. We provide managerial guidelines for the manufacturer in selecting a better contract form under different conditions.