Vertical contracts between manufacturers and retailers often aim to
A)Incentivize the retailers to undertake costly activities,which they otherwise may not realize the full benefits of on their own
B)Reward the manufacturer for undertaking the risk inherent in introducing a new product
C)Serve as a "signal" of the retailer's belief of the likely success of his product
D)All of the above

Question

​Vertical contracts between manufacturers and retailers often aim to
A)​Incentivize the retailers to undertake costly activities,which they otherwise may not realize the full benefits of on their own
B)Reward the manufacturer for undertaking the risk inherent in introducing a new product
C)Serve as a "signal" of the retailer's belief of the likely success of his product
D)​All of the above

Quizplus · Accepted Answer

Vertical contracts between manufacturers and retailers are designed to incentivize retailers to engage in activities that benefit both parties but might not be undertaken by the retailer due to the cost or risk involved. These activities could include special promotions, enhanced display efforts, or additional sales support for the manufacturer's products. The aim is to align the interests of both the manufacturer and the retailer more closely, ensuring that both parties work together to maximize sales and profits. Choices B and C do not accurately describe the primary purpose of vertical contracts in this context.

​Vertical Contracts Between Manufacturers and Retailers Often Aim to

Vertical Contracts Between Manufacturers and Retailers Often Aim to