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Many retailers designate one national brand manufacturer in each product category as a "category captain" to help manage the entire category. A category captain may perform demand-enhancing services such as better shelf arrangements, shelf-space management, and design and management of in-store displays. In this paper, we examine when and why a retailer may engage one manufacturer exclusively as a category captain to provide such service and the implications. We find that demand substitutability of competing brands gives rise to a service efficiency effect--service that expands the category is more effective in increasing a manufacturer's sales and margin than service that shifts demand from a rival's brand. We show that the service efficiency effect may motivate a category captain to provide a service that benefits all brands in the category even though doing so is more costly. We further show that, in categories that are less price competitive, there is higher competition between manufacturers to become the category captain. Consequently, a retailer may obtain better service by using a category captain than by engaging both manufacturers simultaneously. Our findings may help explain why a retailer may rely on a category captain despite concerns regarding opportunism and why there is limited empirical evidence of harm to rival manufacturers.category management, delegation, distribution channels, retailing, suppy chain collaboration

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Platforms refer to intermediaries that facilitate economic interaction between two sets of agents wherein the decisions of one set of agents are likely to have an effect on the other via direct and/or indirect externalities. Given their nature, platforms need to find the appropriate balance between the competing objectives of agents and act as catalysts by facilitating the beneficial effects of externalities. In this paper, we discuss the current theoretical and empirical literature on two-sided platforms. We then identify three dimensions that offer opportunities to advance the empirical literature: (a) unanswered theoretical and conceptual questions, (b) data-related opportunities, and (c) methodological challenges.

In many market settings, a customer often obtains assistance from a supplier (or service provider) to make better-informed decisions regarding the supplier’s product (or service). Because the two parties often have conflicting pecuniary incentives, customer trust and supplier trustworthiness play important roles in the success of these interactions. We investigate whether and how the process through which assistance is provided can foster trust and trustworthiness, and thus facilitate better cooperation. We compare three prevalent assistance processes: information sharing, advice provision, and delegation. We propose that, even if the pecuniary incentives of both parties do not vary from one assistance process to another, the assistance process itself impacts the customer’s and supplier’s nonpecuniary motives that give rise to trust and trustworthiness. Consequently, the assistance process affects the level of cooperation and payoffs. We test our behavioral predictions through laboratory experiments based on a retail distribution setting. We quantify the impact of different assistance processes on trust, trustworthiness and channel performance, and identify the underlying drivers of those impacts. Our results offer insight into the role of the assistance process in managing supplier assistance effectively and why certain assistance processes may lead to more successful outcomes than others even if the pecuniary incentives remain unaltered. The online appendix is available at https://doi.org/10.1287/mnsc.2016.2617 . This paper was accepted by Vishal Gaur, operations management.

Daily deal websites help small local merchants to attract new consumers. A strategy adopted by some websites is to continually track and display the number of deals sold by a merchant. We investigate the strategic implications of displaying deal sales and the website’s incentive to implement this feature. We analyze a market in which a merchant offering an experience good is privately informed of its type. Whereas daily deals cannibalize a merchant’s revenue from experienced consumers, we show that, by displaying deal sales, the website can transform this cannibalization into an advantage. Displaying deal sales can leverage discounted sales to experienced consumers to help a high-quality merchant signal its type and acquire new consumers at a higher margin. Signaling is supported through observational learning from displayed deal sales since it reveals how experienced consumers respond to the deal. Nevertheless, the website may not implement this feature if signaling entails too much distortion in the merchant’s deal price. We also find that it can be optimal for the website to offer the merchant an up-front subsidy, but only if the website displays deal sales. Our analysis leads to managerial insights for daily deal websites. This paper was accepted by J. Miguel Villas-Boas, marketing.

Many firms today manage their existing customers differentially based on profit potential, providing fewer incentives to less profitable customers and firing unprofitable customers. Although researchers and industry experts advocate this practice, results have been mixed. We examine this practice explicitly accounting for competition and find that some conventional prescriptions may not always hold. We analyze a setting where customers differ in their cost to serve. We find that when a firm can discriminate among its customers but the rival cannot, customer base composition influences the rival's poaching behavior. Consequently, even though a low-cost customer is more profitable when viewed in isolation, a high-cost customer may be strategically more valuable by discouraging poaching. Therefore, contrary to conventional advice, it can be profitable for a firm to retain unprofitable customers. Moreover, some customers may become more valuable to retain and receive better incentives when they are less profitable. We further show that, in competitive settings, traditional customer lifetime value metrics may lead to poor retention decisions because they do not account for the competitive externality that actions toward some customers impose on the cash flows from other customers. Our results suggest that firms may need to evolve from a segmentation mindset, which views each customer in isolation, to a customer portfolio mindset, which recognizes that the value of different customers is interlinked. This paper was accepted by J. Miguel Villas-Boas, marketing.

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