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Benefits of Channel Discord in the Sale of Durable Goods

Author

Listed:
  • Anil Arya

    (Ohio State University, Columbus, Ohio 43210-1144)

  • Brian Mittendorf

    (Yale School of Management, New Haven, Connecticut 06520-8200)

Abstract

Minimizing strife through vertical integration is commonly seen as the “holy grail” for long-term success in product distribution. In this paper, we take a different slant, showing that sometimes a separated channel that embodies a degree of discord can be helpful, particularly when a long-term view is taken. This result is shown in the context of durable goods manufacturing. The quandary of durable goods production is that once demand for a certain time frame is met, there is a subsequent temptation to flood the market with additional goods. As such, consumers are reluctant to buy immediately, instead opting to wait for discounted prices. This problem can be alleviated by a degree of channel discord: High wholesale prices ensure future sales will slow to a trickle.

Suggested Citation

  • Anil Arya & Brian Mittendorf, 2006. "Benefits of Channel Discord in the Sale of Durable Goods," Marketing Science, INFORMS, vol. 25(1), pages 91-96, 01-02.
    • Handle: RePEc:inm:ormksc:v:25:y:2006:i:1:p:91-96
    DOI: 10.1287/mksc.1050.0143
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    References listed on IDEAS

    as
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