A bundling sales strategy for a two-stage supply chain based on the complementarity elasticity of imperfect complementary products

Yong Liu · Xiaoying Wang · Wenwen Ren

16 citations0/0 files storedJournal of Business and Industrial Marketing

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Supply Chain and Inventory Management Consumer Market Behavior and Pricing Sustainable Supply Chain Management

Abstract

Purpose This paper attempts to analyze the relationship between the complementarity degrees of imperfect complementary products and sales strategies and give appropriate sales strategies for a two-stage supply chain. Design/methodology/approach With respect to two-stage supply chain consisting of two manufacturers who produce imperfect complementary products and one retailer who sells the products, aiming at bundling sales strategy, the authors define complementarity elasticity of products and use it to measure the degree of complementary between two products. Based on Stackelberg game and cooperation, the authors analyze the relationship between the complementarity degrees of imperfect complementary products and appropriate sales strategies. Findings As the impact of complementarity degree on sales strategy decision-making is better, the authors can pinpoint out which sales decision-making is optimal and which bundling sales strategy is the best for a two-stage supply chain. Considering that the degree of complementarity has a significant impact on the product sales strategy, the authors can point out which sales decision-making is optimal, that is, which bundled sales strategy is the optimal in the secondary supply chain of selling complementary products. Practical implications An innovative bundling can expand the sales of existing products and new products. It helps a retailer transcend and defeat competitors by reducing marketing expenses while increasing profits. Proper use of bundling can improve consumers utility and create an overall positive effect for both the enterprises and consumer. Originality/value The research can help some retailers to make many appropriate bundling sales strategies.

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References

2002Strategic Bundling of Products and Prices: A New Synthesis for Marketing 2004Coordination of cooperative advertising in a two-level supply chain when manufacturer offers discount 2007Strategic Manufacturer Response to a Dominant Retailer 2009Revenue-sharing versus wholesale price mechanisms under different channel power structures 2013Product variety and channel structure strategy for a retailer-Stackelberg supply chain 2006Joint Pricing-Production Decisions in Supply Chains of Complementary Products with Uncertain Demand 2007Coordination in a retailer-led supply chain through option contract 2012Aligning marketing strategies throughout the supply chain to enhance performance

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