INNOVATIONS IN DISTRIBUTION CHANNELS: ADAPTING TO TECHNOLOGICAL ADVANCEMENTS AND CHANGING CONSUMER BEHAVIORS WITH REFERENCE TO ULTRATECH

Abstract

It is often believed that one of the goals of manufacturer advertising is to reduce the perceived substitutability of one's own and rival products, or the cross-price elasticity of commodities. Retailers should oppose manufacturer advertising as it lowers cross-price elasticities, which may lead to channel conflict. We refute these common beliefs by showing the advertisements to a small portion of the customer base. We show three points using a Hotelling demand model: Depending on their bargaining power, (1) manufacturers may lose if their advertisements reduce the cross-price elasticities of their products; (2) channel conflict need not occur even if that is the sole purpose of advertising; and (3) retailers may benefit if consumers perceive manufacturers' products as less interchangeable. When designing a product line, manufacturers often realise that they have little influence over how each item in the line will be marketed to certain demographics. Manufacturers may only influence customers to a certain extent via media communications, product design, and distribution channel decisions; retailers are ultimately the ones that target consumers. Retailers, however, have total control over client interactions, including product presentation and sale, and often put their own interests ahead of that of their customers. Many markets, such as those for often purchased consumer products, appliances, computers, automobiles, etc., frequently experience this. If you're a scholar or professional who wants to understand how manufacturers might employ a targeting strategy that fits their goals and persuade their intermediaries to sell their whole product range, read this article. The main objective of the article is to determine the most important issues for a manufacturer creating a product line to be sold via a distribution channel. The main participants in the distribution channel problem model for product line design are the manufacturer, the retailer (or retailers), and the consumers. Consequently, the distribution network's three levels are covered.