Channel Coordination Mechanisms for Customer Satisfaction
Author(s)
Chu, Wujin; Desai, Preyas S.![Thumbnail](/bitstream/handle/1721.1/1617/Imvp094a.pdf.jpg?sequence=4&isAllowed=y)
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We consider two broad categories of incentives by which a manufacturer can motivate its retailers to provide high customer satisfaction: 1) manufacturer assistance that reduces the retailer's cost of providing customer satisfaction (CS assistance); and 2) customer satisfaction index (CSI) bonus. We show that if a retailer has a long-term orientation, CS assistance is a more effective coordination mechanism that induces the retailer to expend more effort at customer satisfaction. However if the retailer has a short-term orientation, CSI bonus is a more effective coordination mechanism. We then show that a long-term retailed is more valuable to a manufacturer than a short-term oriented one. Finally, we show that the use of CSI incentives results in greater profits for both the manufacturer and the retailer.
Date issued
1995Series/Report no.
Marketing Science;Vol. 14, No. 4
Keywords
customer satisfaction index, short-term orientation, channel distribution, CSI, long-term orientation, Game Theory