This dissertation investigates the role of two marketing practices—returns policies and group-buying services—in improving channel coordination. The first study (presented in Chapter Two) focuses on the interaction between two types of returns policies—returns of unwanted products from consumers to retailers and returns of unsold inventory from retailers to manufacturers. Even without the right to return unsold inventory to the manufacturer, the retailers may accept returns from consumers; by doing so, they benefit from a less pricesensitive market demand, an ability to screen for high-valuation consumers, and a competitive advantage (offering a returns policy makes a retailer more attractive to consumers). From the manufacturer's perspective, accepting returns may induce the retailers to order more stock, set lower prices, generate more sales, and therefore, improves the performance of the channel. However, under some conditions (e.g., when the marginal cost of stock-outs is relatively high), this study shows that this effect disappears and the manufacturer does not accept returns from the retailer in equilibrium. The second study (presented in Chapter Three) investigates the rationale for using group-buying services vis-a-vis the traditional posted-pricing mechanism. It focuses on the behavior of consumers and explores the role of heterogeneity in their valuation for the product and cost of purchasing via group-buying in the functioning of group-buying services as a price-discrimination device. Finally, the role of group-buying services in improving channel coordination under asymmetric information is studied in Chapter Four. This analysis shows that the availability of group-buying services provides an opportunity for the manufacturer to reduce the informational rents of the retailer arising from its private information about the market condition. Interestingly, the manufacturer can avoid paying these rents and regains the first-best profitability when asymmetry in information exists regarding the relative sizes of consumer segments. In other settings (e.g., when asymmetric information exists regarding consumers' price sensitivity), leveraging the group-buying mechanism nevertheless allows the manufacturer to design a contract that requires lower rents and improves channel coordination to some extent.
Doctor of Philosophy (Ph.D.)
College of Business Administration
Length of Campus-only Access
Doctoral Dissertation (Open Access)
Tran, Thanh, "Impact of Returns Policies and Group-Buying On Channel Coordination" (2009). Electronic Theses and Dissertations. 6116.