The Impact of the Manufacturer-Hired Sales Agent on a Supply Chain with Information Asymmetry

Khanjari, Neda; Iravani, Seyed M. R.; Shin, Hyoduk

doi:10.1287/msom.2013.0452

Cited by 41 publications

(19 citation statements)

References 12 publications

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“…They explored compensation schemes that coordinate the decisions of the two managers. Hopp et al (2010), Khanjari et al (2012), and Chen and Xiao (2012) investigated joint supply chain contract and salesforce incentives with either a retailer-or manufacturer-employed salesperson. However, none of these studies considered demand censorship.…”

Section: Literature Reviewmentioning

confidence: 99%

Salesforce Contracting Under Demand Censorship

Chu

Lai

2013

M&SOM

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W e study salesforce contracting in an environment where excess demand results in lost sales and the demand information is censored by the inventory level. In our model, a firm contracts with a risk-neutral sales agent with limited liability whose effort increases the demand stochastically. The firm designs the incentive contract and invests in inventory; the agent decides the sales effort. We find that the sales-quota-based bonus contract is optimal in such an environment, and the quota should be set equal to the inventory level when the first-best solution is not attainable. We further reveal that demand censorship can introduce peculiar effects on the optimal sales effort and service level that the firm implements. From our analysis of the additive and multiplicative effort cases, we find that in the additive effort case, it can be optimal, under demand censorship, for the firm to induce an effort and maintain a service level both greater than those under the first-best solution. Scenarios also exist where the firm should induce zero effort. For the multiplicative effort case, the optimal sales effort under demand censorship is lower than the first-best effort, whereas the optimal service level is higher than the first-best service level. The agent earns zero rent in the additive effort case but may earn a positive rent in the multiplicative effort case. Finally, our numerical analysis shows that demand censorship can have a significant negative impact on the value of contracting with the sales agent, especially when the sales margin is low and the market uncertainty is high.

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Section: Literature Reviewmentioning

confidence: 99%

Salesforce Contracting Under Demand Censorship

Chu

Lai

2013

M&SOM

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“…In this study, we exclude the possibility for the manufacturer to communicate directly with the sales agent. Although our three‐layer supply chain is pervasive in practice, there are also situations where the sales agent is hired or can be directly compensated by the manufacturer (for more details about this situation, see, e.g., ). New insights may be found under this alternative setting.…”

Section: Discussionmentioning

confidence: 99%

Impact of reseller's and sales agent's forecasting accuracy in a multilayer supply chain

Kung

Chen

2014

Naval Research Logistics

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We consider a three‐layer supply chain with a manufacturer, a reseller, and a sales agent. The demand is stochastically determined by the random market condition and the sales agent's private effort level. Although the manufacturer is uninformed about the market condition, the reseller and the sales agent conduct demand forecasting and generate private demand signals. Under this framework with two levels of adverse selection intertwined with moral hazard, we study the impact of the reseller's and the sales agent's forecasting accuracy on the profitability of each member. We show that the manufacturer's profitability is convex on the reseller's forecasting accuracy. From the manufacturer's perspective, typically improving the reseller's accuracy is detrimental when the accuracy is low but is beneficial when it is high. We identify the concrete interrelation among the manufacturer‐optimal reseller's accuracy, the volatility of the market condition, and the sales agent's accuracy. Finally, the manufacturer's interest may be aligned with the reseller's when only the reseller can choose her accuracy; this alignment is never possible when both downstream players have the discretion to choose their accuracy. © 2014 Wiley Periodicals, Inc. Naval Research Logistics 61: 207–222, 2014

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“…First, existing work on brand representatives is relatively sparse. To our knowledge, the only study that investigates the role of manufacturer-hired sales agents focuses on information asymmetries and how they affect the entire supply chain (Khanjari et al 2014). The current work contributes to the understanding of this topic by examining consumers' reactions to this tactic.…”

Section: Background Of "Native Selling"mentioning

confidence: 96%

“…Our findings offer additional insights for the sales force literature when analysing the consequences of a joint sales tactic. Besides Khanjari et al (2014), our work is one of the first to look theoretically at the role of manufacturer-hired sales agents in retail stores. We find that consumers do not differentiate between the retailer and the brand in their responses.…”

Section: Theoretical Contributionmentioning

confidence: 99%

When Brand Representatives Act as Sales Associates: Mechanisms and Effects of Native Selling and its Disclosure

Held¹,

Stieler²,

Germelmann³

et al. 2017

MAR

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This research paper investigates consumer reactions when retailers and brands jointly employ a potentially deceptive sales tactic we term native selling. Native selling describes the use of brand representatives who act as sales personnel in retail stores. We investigate whether consumers are aware of this tactic, how they respond when they discover it has been employed, and whether disclosing the tactic improves consumer reactions. Drawing from research on persuasion knowledge, we predict that consumers will generally view the tactic as deceptive and thus respond negatively both to the store and brand when they believe the tactic is being used. However, we also find that consumers almost never suspect the tactic when it is not disclosed. Finally, we find that when consumers are informed of the tactic, they feel more rather than less deceived. Implications for retailers and brands are discussed.

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The Impact of the Manufacturer-Hired Sales Agent on a Supply Chain with Information Asymmetry

Cited by 41 publications

References 12 publications

Salesforce Contracting Under Demand Censorship

Salesforce Contracting Under Demand Censorship

Impact of reseller's and sales agent's forecasting accuracy in a multilayer supply chain

When Brand Representatives Act as Sales Associates: Mechanisms and Effects of Native Selling and its Disclosure

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