Cooperative Advertising Analysis within a Supply Chain Based on Game Theory

2014 ◽  
Author(s):  
Hong Zhang
Keyword(s):  
Game Theory ◽  
Supply Chain ◽  
Cooperative Advertising

scholarly journals Cooperative Advertising in a Supply Chain with Horizontal Competition

2013 ◽  
Vol 2013 ◽  
pp. 1-16 ◽  
Author(s):  
Yi He ◽  
Qinglong Gou ◽  
Chunxu Wu ◽  
Xiaohang Yue
Keyword(s):  
Game Theory ◽  
Decision Making ◽  
Supply Chain ◽  
Numerical Analysis ◽  
Open Loop ◽  
Channel Member ◽  
Cooperative Advertising ◽  
Horizontal Competition ◽  
Differential Game Theory ◽  
Advertising Strategies

Cooperative advertising programs are usually provided by manufacturers to stimulate retailers investing more in local advertising to increase the sales of their products or services. While previous literature on cooperative advertising mainly focuses on a “single-manufacturer single-retailer” framework, the decision-making framework with “multiple-manufacturer single-retailer” becomes more realistic because of the increasing power of retailers as well as the increased competition among the manufacturers. In view of this, in this paper we investigate the cooperative advertising program in a “two-manufacturer single-retailer” supply chain in three different scenarios; that is, (i) each channel member makes decisions independently; (ii) the retailer is vertically integrated with one manufacturer; (iii) two manufacturers are horizontally integrated. Utilizing differential game theory, the open-loop equilibrium-advertising strategies of each channel member are obtained and compared. Also, we investigate the effects of competitive intensity on the firm’s profit in three different scenarios by using the numerical analysis.

scholarly journals Modelling cooperative advertising decisions in a manufacturer-distributor-retailer supply chain using game theory

2020 ◽  
Vol 30 (2) ◽  
pp. 147-176
Author(s):  
Peter Ezimadu
Keyword(s):  
Game Theory ◽  
Supply Chain ◽  
Optimal Strategy ◽  
Cooperative Advertising ◽  
Subsidy Rate ◽  
Differential Game Theory ◽  
Advertising Effort ◽  
Advertising Strategies ◽  
Channel Structures ◽  
Stackelberg Leader

This work considers cooperative advertising decisions in a manufacturer-distributor-retailer supply chain, where the manufacturer is taken as the Stackelberg leader, using differential game theory. The distributor and retailer are the first and the second followers, respectively. We introduce the distributor into the traditional manufacturer-retailer channel through his direct involvement in advertising as being incorporated into the non-stochastic Sethi's sales-advertising dynamics. This is used to model the awareness share dynamics in which the distributor and the retailer directly engage in advertising, while the manufacturer bypasses the distributor to subsidise only the retail advertising effort. We consider a subsidised and unsubsidised channel structures, where each structure results in a system of three nonlinear equations, which cannot be solved analytically, but only numerically. However, we show that the unique solution to each of the systems exists, provided certain conditions are satisfied. The distributor and the retailer's advertising strategies are developed for both when subsidy is provided and when it is not provided. We also obtain the manufacturer's subsidy rate and the market awareness share for both when retail advertising is subsidised and when it is not subsidised. We observe that with the provision of subsidy, the distributor reduces his advertising effort. However, the resulting increase in the retail advertising effort is larger than the reduction in the distributor's advertising commitment, thus making the channel advertising effort larger with subsidy. It further shows that to avoid being shortchanged, each player should adopt only his optimal strategy or strategies as the case may be.

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