Retailer and Manufacturer Perspectives on Trade Promotions Involving In-Store Promotional Displays
Oguz Cetin, Kelley School of Business, Indiana University
December 25, Friday, 13:40
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Manufacturers often provide incentives (trade deals) to induce retailers to feature their own products by displaying and discounting the retail price, but it is not always in a retailer’s best interests to feature a particular product, because the retailer’s objectives are more closely aligned with the overall category profits. We examine mainly three important questions in this context. First, how should a retailer respond to a manufacturer’s trade promotion offer, where a response consists of decisions on how much of the trade promotion to pass-through to the customers and whether to feature the product on a promotional display? Second, how should a manufacturer design its trade promotion offer? And finally, what is the impact of this interaction on the customers? We use multinomial logit to model customer choice and study a bi-level optimization framework to answer these questions.
Oguz Cetin is an assistant professor of Operations and Decision Technologies at the Kelley School of Business, Indiana University. His main research interest is in retail operations, with a focus on customer choice modelling and assortment-related decisions in retailing. He is also interested in the operations-marketing interface, in particular sales and trade promotions, and their impacts on retailer-manufacturer relationships. He is currently teaching Supply Chain Management and Revenue Management in the undergraduate and Ph.D. programs. Prior to joining Kelley School, he taught Operations Management and received the Harvey Wagner Scholar Award at The Kenan-Flagler Business School, University of North Carolina, from where he received his doctoral degree in 2019. He also has bachelor’s and master’s degrees from Industrial Engineering at Bilkent University, Turkey.