PULL PROMOTIONS AND CHANNEL COORDINATION

This paper recommends that manufacturers consider a pull price promoti on as a coordination device in an independent channel of distribution. Uncoordinated decisions of both manufacturer and retailer to charge h igh prices can break down the effort to expand the market, resulting i n losses to the channel as a whole. We show that manufacturers can enh ance channel price coordination by designing pull price discounts that target price-conscious consumers. The increased price coordination im proves total channel profits and consumer surplus. Supporting pull wit h push increases the probability of coordination.