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Category Captainship in the Presence of Retail Competition
Author(s) -
Nakkas Alper,
Alan Yasin,
Kurtuluş Mümin
Publication year - 2020
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/poms.13109
Subject(s) - business , profit (economics) , competition (biology) , implementation , retail market , industrial organization , retail industry , supply chain , marketing , microeconomics , economics , computer science , ecology , biology , programming language
Category captainship (CC) is a supply chain practice in which a retailer collaborates with a manufacturer to develop and implement a category management strategy. We examine the role of retail competition in CC implementations by analyzing a game‐theoretic setting with two competing retailers. We first consider a benchmark model in which both retailers adopt traditional category management. Then, we consider a CC model in which the focal retailer implements CC. Comparing the equilibrium outcomes of these two models leads to the following insights: First, despite preventing the emergence of CC in some cases, retail competition increases the upside potential of CC for the focal retailer. Second, the focal retailer’s CC implementation can increase the competing retailer’s market share and profit. Third, a manufacturer may agree to serve as a captain even though CC decreases the profit it generates through the focal retailer channel because retail competition enables it to recoup its losses through the competing retailer channel. Last, retail competition alleviates concerns about the potential negative impact of CC on consumers. We discuss the implications of the study for retailers, manufacturers, and policymakers.