What issue does double marginalization primarily address?

Double marginalization primarily addresses the inefficiencies that arise when multiple levels of a distribution channel each add their own markup to a product. This phenomenon can lead to inflated final prices for consumers because both manufacturers and retailers are applying their own margins to the selling price.

The focus on profits without excessively raising consumer prices is correct since the concept of double marginalization highlights how each party in the supply chain aims to maximize their own profits, often at the expense of overall sales and consumer welfare. By addressing this issue, companies can optimize pricing strategies that maintain competitive pricing for consumers while still allowing for profit margins that are beneficial to all parties involved.

In contrast, other options do not directly capture the essence of what double marginalization entails. While the distribution of power among channel partners and coordination among channel members are relevant to supply chain dynamics, they do not specifically zero in on the pricing strategies and profit maximization issues that double marginalization highlights. Similarly, effective marketing strategies for new products pertain more to market entry and positioning strategies rather than the pricing inefficiencies represented in double marginalization.