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Collaborative Promotions
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Promotions are at the same time beloved and feared by both food retailers and branded goods manufacturers in today s retail environment. Beloved because they attract smart customers and generate an immediate effect on a brand s sale. Feared because there is uncertainty about the competitors behavior and the actual customer demand leading to high forecast errors. For the retailer, this results in a doom loop of over- or understocking with high inventory costs in the supply chain.§Collaboration between retailers and the manufacturer disentangles the doom loop. The thesis reveals the appropriate kind and timing of information and develops a so called Competition Index. Inventory in the supply chain is eliminated and the customer is served better at a lower price. Based on a joint inventory and pricing model and an empirical analysis, it shows that the supply chain efficiency gains from collaborative promotions result in a win for customers, retailers and the manufacturer.
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