Game Models Of Cooperative Advertising Between Manufacturer And Retailer In Supply Chain

Cooperative advertising in a supply chain, i.e., the manufacturer reimburses a retailer for promoting the manufacturer's products, has become a mainstay of marketing practice. Based on the survey of the current researches on co-op advertising, this paper mainly employs a game theory approach to thoroughly study the co-op advertising program within the two-echelon supply chain, composed of manufacturer and retailer, in the competitive context and the non-competitive setting. Among them, the competitive context is divided into the static environment and the dynamic environment.Firstly, this paper systematically expounds the advances in research of co-op advertising theory from the static context, the dynamic setting, and empirical analyses at home and abroad. Then, we sum up and evaluate these existing researches in detail.Secondly, this paper introduces the mechanism of competition among retailers. We investigate the manufacturer's and the retailers'optimal advertising strategies, expected profits and the system profits in the event of retailers'cooperation and non-cooperation respectively. Comparing the two equilibrium outcome, we find that two retailers can get a higher share rate from the manufacturer when two retailers cooperate.Thirdly, this paper intends to transfer the researches on co-op advertising model from the static setting to a dynamic framework. We fully consider both short and long term impacts of the manufacturer's national advertising and retailer's local advertising on the products'sales volume. And we respectively obtain the closed-form solutions of the manufacturer's and the retailer's optimal feedback strategies, and the relevant system's optimal profits in the event of retailers'cooperation and non-cooperation respectively. By comparatively analyzing, we find that manufacturer's and retailers'current level of the ads affect their level of the next phase of advertising, and manufacturer gives the same share rate in this cycle and the next cycle.Finally, this paper relaxes the previous assumption that the market demand is certain. We specially discuss the problem of co-op advertising, ordering and stocking when a random factor satisfies uniform distribution. We individually explore the manufacturer's and the retailer's optimal action strategies, both expected profits and the entire system expected profits in the Stackelberg leader-follower game and the Nash cooperative game. The results show that, ordering quantities, the stocking level, the national or local advertising rate, the respective expected profits of channel members, and the system expected profits at Nash co-op equilibrium are higher than those at Stackelberg equilibrium.