Modelling Subsidy as a Cooperative Advertising Channel Coordination Mechanism

This work considers the use of subsidy as channel coordination strategy in vertical cooperative advertising in which the manufacturer is the Stackelberg game leader and the retailer is the follower. While the retailer is directly involved in advertising, the manufacturer is indirectly involved through the provision of subsidy to aid the retailer in advertising the product. The work models the demand function using a multiplicative advertising-price-demand function, and obtains the players’ prices, the retail advertising effort, the manufacturer’s subsidy rate and the payoffs. The work observes that with increasing subsidy, the manufacturer’s price margin increases while that of the retailer reduces and eventual becomes zero with total subsidy. However, the manufacturer should not totally subsidise retail advertising since it would be counterproductive for him, while at the same time would lead to very large retail payoff. Thus with appropriate subsidy strategy, the prices and the payoffs, and eventually the entire channel can be coordinated. Keywords: Channel coordination, Vertical cooperative advertising, Stackelberg game, Advertising price-demand function, Subsidy rate

Local advertising externalities and cooperation in one manufacturer-two retailers channel

In this paper, we consider a static model for advertising strategies and pricing decisions in supply chain with one monopolistic manufacturer and two duopolistic retailers. We assume an additive form of the consumer demand which is influenced by retail price and advertising. The manufacturer sets the wholesale price, invests in advertising (at national level) and offers cooperative advertising to boost the advertising expenditures of their retailers. The retailers set the retail price and invest in advertising (at local level). By means of game theory, we discuss three different relationships between the supply chain members: two non cooperative games including the Stackelberg – Cournot and the Stackelberg – Collusion and one cooperative game. The comparison between the three models reveals that the advertising, the pricing, the consumer demand and the profits are affected by various relationships. Furthermore, under the cooperation situation, we propose a channel coordination mechanism through a manufacturer’s participation rate in retailers’ local advertising cost and wholesale price by using utility function

Manufacturer's pricing strategies in cooperative and non-cooperative advertising supply chain under retail competition

This article studies the manufacturer's pricing strategy in a supply chain with a single manufacturer and two competing retailers. The manufacturer, as a Stackelberg leader specifies wholesale prices to two retailers who face advertisement dependent demand. Based on this gaming structure, two mathematical models are developed - the cooperative advertising model where manufacturer shares a fraction of retailers' advertising costs and the non-cooperative advertising model where manufacturer does not share any retailer's advertising expenses. The optimal strategies of the manufacturer and retailers are determined and a numerical example is taken to illustrate the theoretical results derived. We show that cooperative advertising policy is beneficial not only for the participating entities but also for the entire supply chain

A Game Theoretic Framework for Competing/Cooperating Retailers under price and advertising dependent demand

In this paper, we develop a game theoretic model for cooperative advertising in a supply chain consisting of a monopolistic manufacturer selling its product to the consumer only through competing duopolistic retailers. We consider a new form of the demand function which is an additive form. The demand is influenced by both retail price and advertising expenditures. To identify optimal advertising and pricing decisions, we discuss three possible games (two non cooperative games including Stackelberg-Cournot and Stackelberg-Collusion, and one cooperative game) and then we compare the various decision variables and the profits for all cases and also with similar results of the existing literature to develop some important insights

Publicidad cooperativa en una cadena de distribución con un fabricante y dos minoristas

En este Trabajo Fin de Grado se analizan y estudian aspectos de Teoría de Juegos, y en particular se estudia en detalle el modelo y los resultados obtenidos en Wang et. al. (2011), relacionados con la publicidad cooperativa en cadenas de distribución. En primer lugar, se explican brevemente los modelos analizados en Wang et. al. (2011), para posteriormente profundizar en el análisis de la sensibilidad de los resultados ante variaciones positivas o negativas de distintos valores de los parámetros del modelo. Los distintos estudios se realizan utilizando Microsoft Excel y las fórmulas de las diferentes expresiones presentadas en Wang et. al. (2011)Grado en Administración y Dirección de Empresa

Модели экономического влияния рекламы: третичные эффекты

Настоящая работа представляет собой пятую, заключительную часть цикла статей, посвященных обзору существующих моделей, методов и взглядов на эффекты воздействия экономического института рекламы на рынок на всех возможных уровнях. В ней рассмотрен наивысший уровень влияния рекламы, связанный с возникновением инспирированных рекламой изменений структуры рыночных взаимодействия. К эффектам данного типа – третичным – относятся не только изменение свойств равновесия из-за рекламы, но и появление новых типов участников рынка, чья деятельность определяется исключительно связанными с рекламой целями. Для описания подобных эффектов используются модели маркетинговых каналов – особого рода производственных цепочек, связывающих предшествующую и последующую единицы с помощью контрактов на совершение рекламной и промо-деятельности – и модели двух- и трехсторонних рынков, дополняющих анализ исследованием поведения фирм-посредников, размещающих рекламу в СМИ и связывающих производителей и потребителей