A GAME THEORETICAL STUDY OF COOPERATIVE ADVERTISING WITH MULTIPLE RETAILERS IN A DISTRIBUTION CHANNEL

Extant studies of cooperative advertising mainly consider a single-manufacturer-single-retailer channel structure. This can provide limited insights, because a manufacturer, in real practices, usually deals with multiple retailers simultaneously. In order to examine the impact of the retailer＇s multiplicity on channel members＇ decisions and on total channel efficiencies, this paper develops a multiple-retailer model. In this model, the manufacturer and the retailers play a Stackelberg game to make the optimal advertising decisions. Based on the quantitative results, it is observed that： 1） When there are multiple symmetric retailers, as the number of retailers scales up, the manufacturer＇s national advertising investment contributes increasingly to add to channel members＇ profits in equilibrium, but the total channel efficiency deteriorates quickly and converges down to a certain value; 2） When there are multiple asymmetric retailers, the distribution channel suffers from the manufacturer＇s uniform participation strategy due to the retailer＇s free-riding, and benefits with the manufacturer＇s retailer-specific participation strategy. This study derives equilibrium solutions in closed form for all games considered and measures explicitly the gains/losses of channel efficiencies under different game settings.

SUPPLY CHAIN PERFORMANCE FOR DETERIORATING ITEMS WITH COOPERATIVE ADVERTISING

To study the effect of cooperative advertising on the supply chain of deteriorating items, this paper establishes a Stackelberg game model for a two-echelon deteriorating items supply chain composed of one manufacturer and one retailer under a given support program with an exogenous participation rate. The manufacturer as the leader determines the wholesale price and production rate, and the retailer as the follower determines the retail price and advertising strategies. The strategies of the players under the decentralized scenario and the centralized scenario are respectively characterized. Numerical simulations and sensitivity analysis are conducted to gain some managerial insights. It is shown that the pricing, advertising and production strategies are negatively correlated to deteriorating coefficient, and both the profit and the channel efficiency decrease with deteriorating coefficient; The interaction between price, advertising investment and production rate results in a higher retail price of the centralized channel compared to that of the decentralized channel; Implementing the cooperative advertising program does improve the performance of the supply chain in some cases and the participation rate roughly at 0.5 is most preferable, but it is also possible to distort incentive and damage the channel performance when the participation rate reaches a relatively high level.

COOPERATIVE ADVERTISING AND PRICING MODELS IN A DYNAMIC MARKETING CHANNEL

This paper studies dynamic pricing and cooperative advertising strategies in a two-member channel of distribution. We propose differential game models that incorporate the carryover effects of advertising over time for both manufacturer and retailer. Two different models are studied. Firstly, we discussed a non-cooperative differential game which the manufacturer supports partially the cost of the promotion activities. Secondly, both channel members cooperatively determine their respective strategies. In these two cases, dynamic cooperative advertising and pricing strategies are characterized. Then numerical simulation method is applied to analyze the sensitivity of main model parameters and compare the main results of the two models. The simulation results show that the cooperative model achieves better coordination than the non-cooperative model with the following features： all channel members achieve higher advertising efforts and profit level in the cooperative case rather than in the non-cooperative case.