Market targeting and information sharing with social influences in a luxury supply chain

We consider a luxury supply chain in which one Stackelberg manufacturer sells products to consumers through a retailer. Driven by exclusivity or conformity, consumers are classified as either snobs or conformists, with uncertain preferences about the product. The manufacturer can obtain a private signal on this preference, while the retailer cannot. Results show that the manufacturer makes different market-targeting schedules in response to different signals. Interestingly, the manufacturer may benefit from either a no-information, a private-information, or an information-sharing policy, depending on its market-targeting strategy. Not sharing the manufacturer’s information, however, is preferred by the retailer.