Re-investigating RCM and Category Captainship for substitute products under non-symmetric cross-price sensitivity and complementary products under the symmetric complementarity

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In this research, we will model a non-symmetric cross-price sensitivity demand function derived from the utility function (Singh and Vives, 1984). And we use this non-symmetric demand function to re-investigating the relative management issues including the retailer category shelf space allocation, the optimal wholesale price set by manufacturers, and retail prices set by the retailer or Category captain in RCM and CC scenario. Finally, we proposed a numerical analysis to explain the different situations including the different opportunity cost of shelf space, different product cross-price sensitivity, different profit sharing of CC alliance, etc. And we will provide management implications for the retailer, category captain and non-captain manufacturer in different cases of RCM and CC. The utility function from Singh and Vives (1984) can explain the degree of substitution and complementarity between products, it can achieve the purpose of this research. Hence, we adopted the utility function of Singh and Vives (1984) to construct the complementary product demand function under the symmetric complementarity, and we study two complementary categories by using Category Captain management, named as “Complementary Category Captainship” (CCC). We will extend the CC mechanism from Kurtulus and Toktay (2011) to construct a CCC scenario.