Impact of customer-centric approach and customer dissatisfying cost on supply chain profit under price competition

Abstract

Purpose

The purpose of this study is to provide a unique competitive advantage to businesses in providing a wide range of products to prospective customers. To the best of the author’s knowledge, there is no study to discuss the impact of customer-centric retailing on total supply chain profit under price competition between organized and unorganized retailers.

Design/methodology/approach

This paper considers a supply chain comprising of organized and unorganized retailers and a single manufacturer. This paper proposes three mathematical models considering a customer-centric approach in a competitive environment. Stackelberg game is used to examine how members of the chain interact, and Nash equilibrium was used to find optimal strategies for players under different customer-centric approaches.

Findings

The results show that the total supply chain profit is higher when both organized and unorganized retailers use a customer-centric approach independently instead of collaborating process. The result, in addition, establishes that when the dissatisfying cost exceeds a certain threshold (1.5), the total profit is higher for the organized customer-centric effort model compared to the other two models.

Originality/value

The main contribution of the study is to examine the effect of customer-centric retailing, considering dissatisfying costs on supply chains profit and individual decision-making under price competition between organized retailers and unorganized retailers. The authors developed different mathematical models in the different customer-centric approach.

Citation

Jena, S.K. (2023), "Impact of customer-centric approach and customer dissatisfying cost on supply chain profit under price competition", Journal of Business & Industrial Marketing, Vol. 38 No. 11, pp. 2341-2359. https://doi.org/10.1108/JBIM-02-2022-0111