An Analysis Of Advertisement Strategies Of Upstream And Downstream Enterprises Under Longitudinal Constraints

As we all know, with the development of economy and society, advertising is becoming increasingly important in daily life. Now downstream enterprises is growing, which have an increasing number of sales channels and scale advantages, all these reasons have caused cooperative advertising go into upstream and downstream businesses. Cooperative advertising is actually a cost-sharing mechanism, upstream enterprises give a certain percentage of the cost to downstream enterprises’ local advertising investment. In essence, this is a business model of vertical integration which can be used by the upstream and downstream enterprises. From the four basic market structure, and then widened to more general market structure model, I analysis the equilibrium solution for the up and downstream business in cooperation and non-cooperation cases. I also calculate the profits for the up and downstream enterprises, as well as the whole system.At the beginning, the paper reviews the cooperative advertising research in upstream and downstream enterprises to provide a theoretical basis for the model. Next, using the complete competition as a benchmark case, using the three market structure(1.upstream enterprises as a leader, the downstream enterprises as a follower. 2. The upstream enterprises as a follower, the downstream enterprises as a leader. 3. Both of them have power in market) as a help, through building the model, solving the equilibrium, I compare the profits change between cooperative and non-cooperative situation. After all, I make a conclusion which is that if the up and downstream companies cooperate with each other during the advertising, the whole system’s profit will increase. And it will not only bring more clear market information to the consumers, but also conducive to the allocation of resources. The third part which is broaden the forms of market structure, up and downstream company are monopoly company, and the downstream company also consist with a lot of micro companies. This kind of market structure is more common in reality. After establishing the model and solving social welfare problem, I think in such a market structure, social welfare will increase if they cooperate with each other. Upstream and downstream enterprises have a positive attitude towards advertising, which will cause more conducive to the transmission of information. In this paper, after the analysis, I use an example, which is that during the 11.11,auto manufacturers and vendors use different ways to cooperate, and, ultimately, you can see the cooperative advertising allows upstream and downstream enterprises to achieve win-win situation. At last part, for some of the problems easily raised in cooperative advertising, I feel we can solve them as the following ways: building a reasonable choice of forms of advertising, giving a clear interest and tasks, regulating cooperation agreement, building the evaluation system and so on.Finally, this paper summarizes the main findings, and take prospects for future research directions.