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

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:

More articles from Business and Finance:

nachricht Blockchain Set to Transform the Financial Services Market
28.09.2016 | HHL Leipzig Graduate School of Management

nachricht Paper or plastic?
08.07.2016 | University of Toronto

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: Light-driven atomic rotations excite magnetic waves

Terahertz excitation of selected crystal vibrations leads to an effective magnetic field that drives coherent spin motion

Controlling functional properties by light is one of the grand goals in modern condensed matter physics and materials science. A new study now demonstrates how...

Im Focus: New 3-D wiring technique brings scalable quantum computers closer to reality

Researchers from the Institute for Quantum Computing (IQC) at the University of Waterloo led the development of a new extensible wiring technique capable of controlling superconducting quantum bits, representing a significant step towards to the realization of a scalable quantum computer.

"The quantum socket is a wiring method that uses three-dimensional wires based on spring-loaded pins to address individual qubits," said Jeremy Béjanin, a PhD...

Im Focus: Scientists develop a semiconductor nanocomposite material that moves in response to light

In a paper in Scientific Reports, a research team at Worcester Polytechnic Institute describes a novel light-activated phenomenon that could become the basis for applications as diverse as microscopic robotic grippers and more efficient solar cells.

A research team at Worcester Polytechnic Institute (WPI) has developed a revolutionary, light-activated semiconductor nanocomposite material that can be used...

Im Focus: Diamonds aren't forever: Sandia, Harvard team create first quantum computer bridge

By forcefully embedding two silicon atoms in a diamond matrix, Sandia researchers have demonstrated for the first time on a single chip all the components needed to create a quantum bridge to link quantum computers together.

"People have already built small quantum computers," says Sandia researcher Ryan Camacho. "Maybe the first useful one won't be a single giant quantum computer...

Im Focus: New Products - Highlights of COMPAMED 2016

COMPAMED has become the leading international marketplace for suppliers of medical manufacturing. The trade fair, which takes place every November and is co-located to MEDICA in Dusseldorf, has been steadily growing over the past years and shows that medical technology remains a rapidly growing market.

In 2016, the joint pavilion by the IVAM Microtechnology Network, the Product Market “High-tech for Medical Devices”, will be located in Hall 8a again and will...

All Focus news of the innovation-report >>>



Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

Agricultural Trade Developments and Potentials in Central Asia and the South Caucasus

14.10.2016 | Event News

World Health Summit – Day Three: A Call to Action

12.10.2016 | Event News

Latest News

Oasis of life in the ice-covered central Arctic

24.10.2016 | Earth Sciences

‘Farming’ bacteria to boost growth in the oceans

24.10.2016 | Life Sciences

Light-driven atomic rotations excite magnetic waves

24.10.2016 | Physics and Astronomy

More VideoLinks >>>