We consider two broad categories of incentives by which a manufacturer can motivate its retailers to provide high customer satisfaction: 1) manufacturer assistance that reduces the retailer's cost of providing customer satisfaction (CS assistance); and 2) customer satisfaction index (CSI) bonus. We show that if a retailer has a long-term orientation, CS assistance is a more effective coordination mechanism that induces the retailer to expend more effort at customer satisfaction. However if the retailer has a short-term orientation, CSI bonus is a more effective coordination mechanism. We then show that a long-term retailed is more valuable to a manufacturer than a short-term oriented one. Finally, we show that the use of CSI incentives results in greater profits for both the manufacturer and the retailer.
| Identifer | oai:union.ndltd.org:MIT/oai:dspace.mit.edu:1721.1/1617 |
| Date | January 1995 |
| Creators | Chu, Wujin, Desai, Preyas S. |
| Source Sets | M.I.T. Theses and Dissertation |
| Language | en_US |
| Detected Language | English |
| Format | 2474945 bytes, application/pdf |
| Relation | Marketing Science;Vol. 14, No. 4 |
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