Target pricing: Demand-side versus supply-side approaches

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• 作者：Hongmin Li ; ^{hongmin.li@asu.edu} ; Yimin Wang ^{yimin_wang@asu.edu} ; Rui Yin ^{rui.yin@asu.edu} ; Thomas J. Kull ^{thomas.kull@asu.edu} ; Thomas Y. Choi ^{thomas.choi@asu.edu}
• 关键词：Target pricing ; Cost-improvement sharing ; Competing supply chains ; Cournot duopoly
• 刊名：International Journal of Production Economics
• 出版年：2012
• 出版时间：March 2012
• 年：2012
• 卷：136
• 期：1
• 页码：172-184
• 全文大小：397 K

文摘

The practice of target pricing has been a key factor in the success of Japanese manufacturers. In the more commonly known demand-side approach, the target price for the supplier equals the manufacturer's market price less a percent margin for the manufacturer but no cost-improvement expenses are shared. In the supply-side approach, cost-improvement expenses are shared and the target price equals the supplier's cost plus a percent margin for the supplier. Using a general oligopoly and Cournot duopoly models, we characterize the equilibrium and optimal policy for each approach under various conditions. We find that sharing cost-reduction expenses allows the manufacturer using the supply-side approach to attain competitive advantage in the form of increased market share and higher profit, particularly in industrial conditions where margins are thin and price sensitivities are high.