Research on operation mechanisms of shareholding supply chains considering retailers’ marketing efforts

Abstract

Purpose Marketing is a hot topic, and the purpose of this study is to investigate how shareholding strategies can be applied to achieve strategic synergy between firms in vertical supply chains to improve retailers’ marketing efforts from a long-term perspective. Design/methodology/approach This study constructs Stackelberg models to analyze the operating mechanisms of shareholding supply chains under forward, backward and cross-shareholding strategies. The authors analyze the effects of shareholding on prices, marketing efforts and profits, and explore the strategic preferences and outcomes of different supply chain members. Findings Forward/backward shareholding plays the same role as cross/nonshareholding in supply chains because the effect of the retailer’s shareholding is offset by the power status of the manufacturer, and the retailer can still profit when wholesale prices are higher than selling prices in certain cases. A manufacturer’s shareholding in a retailer can benefit consumers and improve marketing efforts by reducing retailers’ marketing costs, while a retailer’s shareholding in a manufacturer has no such effect. None of all shareholding strategies can coordinate the interests of all members; however, an effective rebate policy can resolve this problem. Originality/value The results reveal the operational mechanism of shareholding supply chains and provide reference values for managers who want to improve marketing efforts and economic performance using a shareholding strategy.