Journal of Korean Society of Industrial and Systems Engineering (산업경영시스템학회지)

Society of Korea Industrial and System Engineering (한국산업경영시스템학회)
권호 표지

Game Theoretic Analysis of the Direct Marketing Channel Strategy of a Manufacturer

게임이론을 이용한 제조업체의 직접마케팅 진입전략 분석

  • Rhee, Min-Ho (Dept. of Industrial Systems Engineering, Gyeongsang National University) ;
  • Cho, Hyung-Rae (Dept. of Industrial Systems Engineering, Gyeongsang National University)
  • 이민호 (경상대학교 공과대학 산업시스템공학부) ;
  • 조형래 (경상대학교 공과대학 산업시스템공학부)
  • Published : 2009.09.30
Download PDF
⟨ Previous Next ⟩

Abstract

The proliferation of the internet and electronic commerce has given the manufacturers the opportunity of direct marketing. This study analyzes the decision of manufacturers regarding whether to sell the products through independent sales company or to sell the products to the consumer directly. To do this, a new demand function is proposed and sub and super games are modeled and analyzed based on the demand function. By analyzing the Nash equilibria, it is shown that the manufacturers' decision of direct or indirect marketing not only depends on the competitiveness between the products but the absolute and relative marketing capabilities of the manufacturers. It is also shown that, in some cases, the manufactures have incentive to rise the competitiveness between the products to maximize the channel profit.

Keywords

References

  1. 조형래, 유정섭, 차춘남, 임상규; “Online과 Offline마케팅 채널 간의 가격경쟁 및 효율성 통제전략 분석”, 대한산업공학회지, 27(2) : 181-189, 2001
  2. 조형래, 류정섭, 차춘남; “B&M 유통업체와 C&M 유통업체 간의 가격경쟁 분석”, 대한산업공학회지, 28(4) : 379-389, 2002
  3. Arnold, M. A.; "Costly Search, Capacity Constraints, and Bertrand Equilibrium Price Dispersion," International Economic Review, 41(1) : 117-133, 2000 https://doi.org/10.1111/1468-2354.00057
  4. Balasubramanian, B.; "Mail versus Mall : A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, 17(3) : 181-195, 1998 https://doi.org/10.1287/mksc.17.3.181
  5. Bakos, Y.; "The Emerging Role of Electronic Marketplaces on the Internet," Communications of the ACM : 1998
  6. Brynjolfsson, E. and Smith, M. D.; "Frictionless Commerce? A Comparison of Internet and Conventional Retailer," Management Science., 46(4) : 563-585, 2000 https://doi.org/10.1287/mnsc.46.4.563.12061
  7. Choi, S. C.; "Price Competition in a Channel Structure with a Common Retailer," Marketing Science, 10(4) : 271-296, 1991 https://doi.org/10.1287/mksc.10.4.271
  8. Gulati, R and Garino, J.; ''Get the Right Mix of Bricks and Clicks," Harvard Business Review, May-June : 107-114, 2000
  9. Hart, C. and Doherty, N.; "Retailer Adoption of Internet Implications for Retail Marketing," European Journal of Marketing, 34 : 954-974, 2000 https://doi.org/10.1108/03090560010331441
  10. Jeuland, A. P. and Shugan, S. M.; "Managing Channel Profits," Marketing Science, 2(3) : 239-272, 1983 https://doi.org/10.1287/mksc.2.3.239
  11. Lal, R., and Sarvary, M.; "When and How Is the Internet Likely to Decrease Price Competition?," Marketing Science, 18(4) : 485-503, 1999 https://doi.org/10.1287/mksc.18.4.485
  12. McGuire, T. W. and Staelin, R.; "An Industry Equilibrium Analysis of Downstream Vertical Integration," Marketing Science, 2(2) : 161-191, 1983 https://doi.org/10.1287/mksc.2.2.161
  13. Pitt, L. F., Berthon, P., and Berthon, J. P.; "Changing Channels : The Impact of the Internet on Distribution Strategy," Harvard Business School Publishing, 1999
  14. Rasmusen, E.; "Games and Information : An Introduction to Game Theory," Basil Blackwell, Inc., 1989
  15. Viswanathan, S.; "Competing Across Technology- Differentiated Channels : The Impact of Network Externalities and Switching Costs," Management Science, 51 (3) : 483-496, 2005 https://doi.org/10.1287/mnsc.1040.0338
  16. Ward, M. R.; "Will E-commerce Compete More with Traditional Retailing or Direct Marketing?," Working Paper, Dept. of Agricultural and Consumer Economics, Univ. of Illinois, USA, 1999