Skip to main content
SpringerLink
Log in

Empirical models of manufacturer-retailer interaction: A review and agenda for future research

  • Published:
Marketing Letters Aims and scope Submit manuscript

Abstract

The nature of the interaction between manufacturers and retailers has received a great deal of empirical attention in the last 15 years. One major line of empirical research examines the balance of power between them and ranges from reduced form models quantifying aggregate profit and other related trends for manufacturers and retailers to structural models that test alternative forms of manufacturer-retailer pricing interaction. A second line of research addresses the sources of leverage for each party, e.g., trade promotions and their pass-through, customer information from loyalty programs, manufacturer advertising, product assortment in general, and private label assortment in particular. The purpose of this article is to synthesize what has been learnt about the nature of the interaction between manufacturers and retailers and the effectiveness of each party’s sources of leverage and to highlight gaps in our knowledge that future research should attempt to fill.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

References

  • Ailawadi, K., & Harlam, B. (2004). An empirical analysis of the determinants of retail margins: the role of store brand share. Journal of Marketing, 68(1), 147–166.

    Article  Google Scholar 

  • Ailawadi, K., & Harlam, B. (2009). Retailer promotion pass-through: a measure, its magnitude, and its determinants. Marketing Science, 28(4), 782–791.

    Article  Google Scholar 

  • Ailawadi, K., Borin, N., & Farris, P. (1995). Market power and performance: a cross-industry analysis of manufacturers and retailers. Journal of Retailing, 71(3), 211–248.

    Article  Google Scholar 

  • Ailawadi, K., Neslin, S., & Gedenk, K. (2001). Pursuing the value conscious consumer: store brands versus national brand promotions. Journal of Marketing, 65(1), 71–89.

    Article  Google Scholar 

  • Ailawadi, K., Pauwels, K., & Steenkamp, J.-B. E. M. (2008). Private label use and store loyalty. Journal of Marketing, 72(6), 19–30.

    Article  Google Scholar 

  • Assmus, G., Farley, J. U., & Lehmann, D. R. (1984). How advertising affects sales: meta-analysis of econometric results. Journal of Marketing Research, 21(1), 25–64.

    Article  Google Scholar 

  • Besanko, D., Dubé, J.-P., & Gupta, S. (2003). Competitive price discrimination strategies in a vertical channel using aggregate retail data. Management Science, 49(9), 1121–1137.

    Article  Google Scholar 

  • Besanko, D., Dubé, J.-P., & Gupta, S. (2005). Own-brand and cross-brand retail pass-through. Marketing Science, 24(1), 123–137.

    Article  Google Scholar 

  • Bolton, R., Kannan, P. K., & Bramlett, M. D. (2000). Implications of loyalty program membership and service experiences for customer retention and value. Journal of the Academy of Marketing Science, 28(1), 95–108.

    Article  Google Scholar 

  • Broniarczyk, S. (2008). Product assortment and consumer psychology. In: Handbook of Consumer Psychology. C. P. Haugtvedt, P. M. Herr, & F. R. Kardes (eds.), Hillsdale, NJ: Lawrence Erlbaum Associates.

  • Camerer, C., & Ho, T.-H. (1999). Experience-weighted attraction learning in normal form games. Econometrica, 67(4), 827–874.

    Article  Google Scholar 

  • Che, H., Sudhir, K., & Seetharaman, P. B. (2007). Bounded rationality in pricing under state-dependent demand: do firms look ahead? How far ahead? Journal of Marketing Research, 44(3), 434–449.

    Article  Google Scholar 

  • Chen, Y., Narasimhan, C., & John Zhang, Z. (2001). Individual marketing with imperfect targetability. Marketing Science, 20(1), 23–41.

    Article  Google Scholar 

  • Chu, J., Chintagunta, P., & Vilcassim, N. (2007). Assessing the economic value of distribution channels: an application to the personal computer industry. Journal of Marketing Research, 44(1), 29–41.

    Article  Google Scholar 

  • Corstjens, M., & Lal, R. (2000). Building store loyalty through store brands. Journal of Marketing Research, 37(3), 281–292.

    Article  Google Scholar 

  • Dhar, S. K., Hoch, S. J., & Kumar, N. (2001). Effective category management depends on the role of the category. Journal of Retailing, 77(2), 165–184.

    Article  Google Scholar 

  • Dorfman, R., & Steiner, P. O. (1954). Optimal advertising and optimal quality. American Economic Review, 44(5), 826–836.

    Google Scholar 

  • Drèze, X., & Bell, D. R. (2003). Creating win-win trade promotions: theory and empirical analysis of scan-back trade deals. Marketing Science, 22(1), 16–39.

    Article  Google Scholar 

  • Dubé, J.-P., & Gupta, S. (2008). Cross-brand pass-through in supermarket pricing. Marketing Science, 27(3), 324–333.

    Article  Google Scholar 

  • Draganska, M., Klapper, D., & Villas-Boas, S. (2010). A larger slice or a larger pie: an empirical investigation of bargaining power in the distribution channel. Marketing Science, 29, 57–74.

    Article  Google Scholar 

  • Erdem, T., & Keane, M. P. (1996). Decision-making under uncertainty: capturing dynamic choice processes in turbulent consumer goods markets. Marketing Science, 15(1), 1–20.

    Article  Google Scholar 

  • Farris, P. W., & Ailawadi, K. (1992). Retail power: monster or mouse? Journal of Retailing, 68(4), 351–369.

    Google Scholar 

  • Farris, P. W., & Reibstein, D. (1984). Overcontrol in advertising experiments. Journal of Advertising Research, 24(3), 37–42.

    Google Scholar 

  • Gartner (2007). Consumer goods manufacturers are losing control of space management. Gartner Industry Research Report, ID G00154105, 1–4.

  • Geyskens, I., Gielens, K., & E.M. Gijsbrechts (2008) Proliferating private label portfolios: how introducing economy and premium private labels influences brand choice. Working Paper, CentER, Tilburg University, The Netherlands.

  • Goldfarb, A., Lu, Q., & Moorthy, S. (2009). Measuring brand value in an equilibrium framework. Marketing Science, 28, 69–86.

    Article  Google Scholar 

  • Hansen, K., & Singh, V. (2008). Are store brand buyers store loyal? An empirical investigation. Management Science, 54(10), 1828–1834.

    Article  Google Scholar 

  • Hartmann, W. R., & Nair, H. (2007) Retail competition and the dynamics of consumer demand for tied goods. Working Paper, Stanford University.

  • Hoch, S. J., & Banerji, S. (1993). When do private labels succeed? Sloan Management Review, 34(4), 57–67.

    Google Scholar 

  • Holleran, J. (1997). Partnering with peapod. Beverage Industry, 88(10), 38–41.

    Google Scholar 

  • Hui, S. K., Fader, P. S., & Bradlow, E. T. (2009a). Path data in marketing: an integrative framework and prospectus for model-building. Marketing Science, 28(2), 320–335.

    Article  Google Scholar 

  • Hui, S. K., Fader, P. S., & Bradlow, E. T. (2009b). The traveling salesman goes shopping: the systematic inefficiencies of grocery paths. Marketing Science, 28(3), 566–572.

    Article  Google Scholar 

  • Israelevich, G. (2004). Assessing supermarket product-line decisions: the impact of slotting fees. Quantitative Marketing and Economics, 2(2), 141–167.

    Article  Google Scholar 

  • Iyer, G., & Villas-Boas, M. (2003). A bargaining theory of distribution channels. Journal of Marketing Research, 40(1), 80–100.

    Article  Google Scholar 

  • Kadiyali, V., Vilcassim, N., & Chintagunta, P. K. (2000). Power in manufacturer-retailer interactions: an empirical investigation of pricing in a local market. Marketing Science, 19(2), 127–148.

    Article  Google Scholar 

  • Kaul, A., & Wittink, D. R. (1995). Empirical generalizations about the impact of advertising on price sensitivity and price. Marketing Science, 14(3), 151–160.

    Article  Google Scholar 

  • Kurtuluş, M., & Toktay, L. B. (2004). Category captainship: who wins, who loses? ECR Journal, 4(2), 27–33.

    Google Scholar 

  • Lal, R., & Bell, D. (2003). The impact of frequent shopper programs in grocery retailing. Quantitative Marketing and Economics, 1(2), 179–202.

    Article  Google Scholar 

  • Larson, J. S., Bradlow, E. T., & Fader, P. (2005). An exploratory look at in-store supermarket shopping paths. International Journal of Research in Marketing, 22(4), 395–414.

    Google Scholar 

  • Leenheer, J., van Heerde, H. J., Bijmolt, T. H. A., & Smidts, A. (2007). Do loyalty programs really enhance behavioral loyalty? An empirical analysis accounting for self-selecting members. International Journal of Research in Marketing, 24(1), 31–47.

    Article  Google Scholar 

  • Lewis, M. V. (2004). The influence of loyalty programs and short-term promotions on customer retention. Journal of Marketing Research, 41(3), 281–292.

    Article  Google Scholar 

  • Lodish, L. M., Abraham, M., Kalmenson, S., Livelsberger, J., Lubetkin, B., Richardson, B., et al. (1995). How TV advertising works: a meta-analysis of 389 real world split cable TV advertising experiments. Journal of Marketing Research, 32(2), 125–139.

    Article  Google Scholar 

  • Mantrala, M. K., Levy, M., Kahn, B. E., Fox, E. J., Gaidarev, P., Dankworth, B., et al. (2009). Why is assortment planning so difficult for retailers? A framework and research agenda. Journal of Retailing, 85(1), 71–83.

    Article  Google Scholar 

  • McAlister, L. (2007). Cross-brand pass-through: fact or artifact? Marketing Science, 26(6), 876–898.

    Article  Google Scholar 

  • Meza, S., & Sudhir, K. (2006). Pass-through timing. Quantitative Marketing and Economics, 4(3), 351–382.

    Article  Google Scholar 

  • Meza, S., & Sudhir, K. (2008). Do private labels increase retailer bargaining power? Working Paper, University of Toronto.

  • Nijs, V., Misra K., Anderson, E., Hansen, K., & Krishnamurthi, L. (2009). Channel pass-through of trade promotions. Marketing Science (in press).

  • Olver, J. M., & Farris, P. W. (1989). Push and pull: a one-two punch for packaged products. Sloan Management Review, 31(1), 53–61.

    Google Scholar 

  • Pancras, J., & Sudhir, K. (2007). Optimal marketing strategies for a customer data intermediary. Journal of Marketing Research, 44(4), 560–578.

    Article  Google Scholar 

  • Pauwels, K. (2007). How retailer and competitor decisions drive the long-term effectiveness of manufacturer promotions for fast moving consumer goods. Journal of Retailing, 83(3), 297–308.

    Article  Google Scholar 

  • Pauwels, K., & Srinivasan, S. (2004). Who benefits from store brand entry? Marketing Science, 23(3), 364–390.

    Article  Google Scholar 

  • Rooderkerk, R. P., van Heerde, H. J., & Bijmolt, T. H. A. (2008). Collaborative retailer-manufacturer assortment optimization: an attribute-based approach. Working Paper, CentER, Tilburg University, The Netherlands.

  • Sethuraman, R., & Tellis, G. J. (1991). An analysis of the tradeoff between advertising and pricing. Journal of Marketing Research, 31(2), 160–174.

    Article  Google Scholar 

  • Shaffer, G., & Zhang, Z. J. (1995). Competitive coupon targeting. Marketing Science, 14(4), 395–416.

    Article  Google Scholar 

  • Sharp, B., & Sharp, A. (1997). Loyalty programs and their impact on repeat-purchase loyalty patterns. International Journal of Research in Marketing, 14(5), 473–486.

    Article  Google Scholar 

  • Steiner, R. L. (1973). Does advertising lower consumer prices? Journal of Marketing, 37(4), 19–26.

    Article  Google Scholar 

  • Sudhir, K. (2001). Structural analysis of competitive pricing in the presence of a strategic retailer. Marketing Science, 20(3), 244–264.

    Article  Google Scholar 

  • Sudhir, K., & Talukdar, D. (2004). Does store brand patronage improve store patronage? Review of Industrial Organization, 24(2), 143–160.

    Article  Google Scholar 

  • Taylor, G. A., & Neslin, S. A. (2005). The current and future sales impact of a retail frequency reward program. Journal of Retailing, 81(4), 293–305.

    Article  Google Scholar 

  • Trade Promotion (2005). Spending and merchandising study. Wilson, CT: Cannondale Associates.

  • Tyagi, R. K. (1999). A characterization of retailer response to manufacturer trade deals. Journal of Marketing Research, 36(4), 510–516.

    Article  Google Scholar 

  • Villas-Boas, S. B. (2007). Using retail scanner data for upstream merger analysis. Journal of Competition Law and Economics, 3(4), 689–715.

    Article  Google Scholar 

  • Villas-Boas, M. J., & Zhao, Y. (2005). Retailer, manufacturers, and individual consumers: modeling the supply side in the ketchup marketplace. Journal of Marketing Research, 42(1), 83–95.

    Article  Google Scholar 

  • Zhang, J., & Wedel, M. (2009). The effectiveness of customized promotions in online and offline stores. Journal of Marketing Research, 46(2), 190–206.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Tuck School of Business, Dartmouth College, 100 Tuck Hall, Hanover, NH, 03755, USA

    Kusum L. Ailawadi

  2. University of Pennsylvania, Philadelphia, PA, USA

    Eric T. Bradlow

  3. Graduate School of Business, Stanford University, Stanford, CA, USA

    Michaela Draganska

  4. Kellogg School of Management, Northwestern University, Evanston, IL, USA

    Vincent Nijs

  5. Tilburg University, Tilburg, The Netherlands

    Robert P. Rooderkerk

  6. School of Management, Yale University, New Haven, CT, USA

    K. Sudhir

  7. Fuqua School of Business, Duke University, Durham, NC, USA

    Kenneth C. Wilbur

  8. University of Maryland, College Park, MD, USA

    Jie Zhang

Authors
  1. Kusum L. Ailawadi
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Eric T. Bradlow
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Michaela Draganska
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Vincent Nijs
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Robert P. Rooderkerk
    View author publications

    You can also search for this author in PubMed Google Scholar

  6. K. Sudhir
    View author publications

    You can also search for this author in PubMed Google Scholar

  7. Kenneth C. Wilbur
    View author publications

    You can also search for this author in PubMed Google Scholar

  8. Jie Zhang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Kusum L. Ailawadi.

Additional information

This paper is based on the presentations and discussion in the “Empirical Models of Manufacturer-Retailer Interaction” track at the Inaugural Erin Anderson Conference on Business-to-Business Relationships held at the Wharton School in October 2008.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Ailawadi, K.L., Bradlow, E.T., Draganska, M. et al. Empirical models of manufacturer-retailer interaction: A review and agenda for future research. Mark Lett 21, 273–285 (2010). https://doi.org/10.1007/s11002-010-9107-0

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11002-010-9107-0

Keywords

Search

Navigation