Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

U of M researcher finds fairness leads to better profits for manufacturers and retailers

26.09.2007
It has long been shown that fairness between business partners yields a better relationship. Now, research from the Carlson School of Management at the University of Minnesota shows that for manufacturers and retailers, thinking about what is best for the entire channel has higher payoffs than just looking out for one firm's best interests.

In the paper “Fairness and Channel Coordination,” published in Management Science, Tony Haitao Cui, assistant professor of marketing, finds that in a marketing channel consisting of a manufacturer and a retailer, a consistent wholesale price throughout can maximize the profits for both the manufacturer and the retailer. In short, looking beyond initial monetary payoffs will benefit both firms in a marketing channel.

“Traditionally manufacturers and retailers set prices that were best for each of them, without regard to the other firm in the channel,” said Cui. “What this study shows is that when the channel members think about fairness and set a constant wholesale price, both partners benefit by getting a better price in the market place.”

Cui and co-authors Jagmohan Raju, and Z. John Zhang, of the Wharton School of Business, started by looking at the relationship between a manufacturer and a retailer to see how the concept of fairness affected channel coordination.

“What we found is that while elaborate pricing contracts may be one way to increase channel profits, it is far simpler than that,” explains Cui. “When the retailer and the manufacturer are working within a mindset of fairness, coordination between them is simplified by setting a constant price instead of one that benefits one over the other.

“The most important outcome of this study is that when the retailer and the manufacturer voluntarily align their interests, it benefits both of them, more than it would if they were just looking out for their own bottom-line.”

Mark Cassutt | EurekAlert!
Further information:
http://www.umn.edu

More articles from Business and Finance:

nachricht Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Tiny lasers from a gallery of whispers

New technique promises tunable laser devices

Whispering gallery mode (WGM) resonators are used to make tiny micro-lasers, sensors, switches, routers and other devices. These tiny structures rely on a...

Im Focus: Ultrafast snapshots of relaxing electrons in solids

Using ultrafast flashes of laser and x-ray radiation, scientists at the Max Planck Institute of Quantum Optics (Garching, Germany) took snapshots of the briefest electron motion inside a solid material to date. The electron motion lasted only 750 billionths of the billionth of a second before it fainted, setting a new record of human capability to capture ultrafast processes inside solids!

When x-rays shine onto solid materials or large molecules, an electron is pushed away from its original place near the nucleus of the atom, leaving a hole...

Im Focus: Quantum Sensors Decipher Magnetic Ordering in a New Semiconducting Material

For the first time, physicists have successfully imaged spiral magnetic ordering in a multiferroic material. These materials are considered highly promising candidates for future data storage media. The researchers were able to prove their findings using unique quantum sensors that were developed at Basel University and that can analyze electromagnetic fields on the nanometer scale. The results – obtained by scientists from the University of Basel’s Department of Physics, the Swiss Nanoscience Institute, the University of Montpellier and several laboratories from University Paris-Saclay – were recently published in the journal Nature.

Multiferroics are materials that simultaneously react to electric and magnetic fields. These two properties are rarely found together, and their combined...

Im Focus: Fast, convenient & standardized: New lab innovation for automated tissue engineering & drug

MBM ScienceBridge GmbH successfully negotiated a license agreement between University Medical Center Göttingen (UMG) and the biotech company Tissue Systems Holding GmbH about commercial use of a multi-well tissue plate for automated and reliable tissue engineering & drug testing.

MBM ScienceBridge GmbH successfully negotiated a license agreement between University Medical Center Göttingen (UMG) and the biotech company Tissue Systems...

Im Focus: Silencing bacteria

HZI researchers pave the way for new agents that render hospital pathogens mute

Pathogenic bacteria are becoming resistant to common antibiotics to an ever increasing degree. One of the most difficult germs is Pseudomonas aeruginosa, a...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

“Lasers in Composites Symposium” in Aachen – from Science to Application

19.09.2017 | Event News

I-ESA 2018 – Call for Papers

12.09.2017 | Event News

EMBO at Basel Life, a new conference on current and emerging life science research

06.09.2017 | Event News

 
Latest News

Molecular Force Sensors

20.09.2017 | Life Sciences

Producing electricity during flight

20.09.2017 | Power and Electrical Engineering

Tiny lasers from a gallery of whispers

20.09.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>