Shahla Zandi, Reza Samizadeh, Maryam Esmaeili,
Volume 33, Issue 4 (12-2022)
Abstract
A coalition loyalty program (CLP) is a business strategy employed by for-profit companies to increase or retain their customers. One of the operational challenges of these programs is how to choose the mechanism of coordination between business partners. This paper examines the role of revenue sharing contracts in the loyalty points supply chain of a CLP with stochastic advertising-dependent demand where the program operator (called the host) sells loyalty points to the partners of the program. The purpose of the study is to examine the effect of this coordination mechanism on the decisions and profits of the members of the chain using the Stackelberg game method and determine whether the presence of revenue sharing contracts benefits the chain members when the advertising is done by the host and when the advertising cost is shared between the host and its partners. The results show that when the host gives bonus points to end customers (advertising), revenue sharing contracts become a powerful incentive for the profitability of the host and its partners. The findings provide new insights into the management of CLPs, which can benefit business decision-makers.
Shahla Zandi, Reza Samizadeh, Maryam Esmaeili,
Volume 34, Issue 3 (9-2023)
Abstract
A coalition loyalty program (CLP) is a business strategy adopted by companies to increase and retain their customers. An operational challenge in this regard is to determine the coordination mechanism with business partners. This study investigated the role of revenue-sharing contracts (RSCs) considering customer satisfaction in coalition loyalty reward supply chain planning. A two-stage stochastic programming approach was considered for the solution considering the demand uncertainty. We aimed to investigate the impact of RSCs on the decision-making and profitability of the host firm of this supply chain taking into account the maximization of the profit coming from the CLP compared to the more common wholesale price contract (WPC). After the model was solved, computational experiments were performed to evaluate and compare the effects of RSCs and WPCs on the performance of the loyalty program (LP). The results revealed that RSC is an effective incentive to increase the host’s profit and reduce its cost. These findings add new insights to the management literature, which can be used by business decision makers.
