Channel Coordination Mechanisms for Customer Satisfaction

Journal Article

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 oriented retailer is more valuable to a manufacturer than a short-term oriented one. Finally, we show that the use of CS incentives results in greater profits for both the manufacturer and the retailer.

Full Text

Duke Authors

Cited Authors

  • Chu, W; Desai, PS

Published Date

  • November 1995

Published In

Volume / Issue

  • 14 / 4

Start / End Page

  • 343 - 359

Published By

Electronic International Standard Serial Number (EISSN)

  • 1526-548X

International Standard Serial Number (ISSN)

  • 0732-2399

Digital Object Identifier (DOI)

  • 10.1287/mksc.14.4.343


  • en