Channel Pricing Decision Based on Manufacturer Forward Integration

Manufacturer forward integration is a common method to improve brand value and compete with independent retailer for manufacturer. Through the comparing analysis between channel pricing decisions under manufacturer forward integration mode and independent retailer mode. We find the following results. The wholesale price under manufacturer forward integration mode is higher than the corresponding wholesale price under independent retailer mode. The retail price in manufacturer-owned store under manufacturer forward integration mode is higher than the corresponding retail price under independent retailer mode. The independent retailer profit under manufacturer forward integration mode is lower than the corresponding profit under independent retailer mode. The profit of manufacturer who owns store under manufacturer forward integration mode is lower than the corresponding profit under independent retailer mode.