Three essays on retailing

This dissertation examines the following three issues that are relevant to retailers. In the first essay, we examine category management from an analytical perspective. The practice of category management involves a strategic alliance between a retailer and a leading national brand at the product category level, where the retailer delegates considerable decision-making authority to the manufacturer of this brand. Facing demanding challenges in the marketplace, retailers have recently adopted this strategic innovation of managing their product categories. An analytic model is developed to address the following two key questions. (a) What categories are most suitable for the adoption of category management? (b) Which manufacturer should the retailer partner with? In the second essay, we propose an explanation for partial forward integration. A significant number of manufacturers sell their products through company-owned stores as well as through independent retailers. More interestingly, many do so in direct competition with independent retailers (e.g., all stores are in the same shopping mall). The goal is to explore an explanation for such arrangements. Building on work on franchising and channel coordination, the research suggests that partial forward integration is a way for manufacturers to ensure their products are provided sufficient service and sold at reasonable market prices. This essay also underscores the important relationship between channel structure and channel coordination goals. In the third essay, we develop a theory of affiliate programs. Affiliate programs, the fastest growing form of Internet marketing today, are programs in which a firm pays a commission to an agent for leads or sales from a link located on the agent\u27s site. The essay analytically models affiliate programs by focusing on sales-based versus customers-based compensation plans. Conditions under which one plan should be adopted are derived. The model is extended to examine the impact of channel overlap where a customer may go to the firm directly or through the agent