Research On Cooperative Advertising Decision With Fairness Concerns

Manufacturers and retailers as upstream and downstream enterprises in the supply chain channel. The retailer distributes products of the manufacturer, and through local advertising to increase product sales, the manufacturer share the local advertising costs together with the retailer to promotes the retailer increase local advertising. This paper introduces fairness concerns into cooperative advertising decision research, analyses the influence of the fairness concerns on the cooperative advertising strategy and the supply chain coordination.Firstly, this paper reviewed the theories of cooperative advertising and fairness concerns at home and abroad.Secondly, this article is composed of a single manufacturer and single retailer of two-stage supply chain system, based on game theory of Nash bargaining, we find that the fairness concerns has significantly impact on the cooperative advertising strategy and the supply chain,cooperative advertising cannot coordinate the supply chain, and verified by numerical analysis.Thirdly, this paper relaxes the previous assumption that the marginal profit of the manufacturers and retailers is constant and considers the wholesale price, retail price into the study of cooperative advertising, and the retailer’s fair reference point is set to the manufacturer’s profits, study the influence of the pricing and the co-op advertising. The results show that, if the retailer from without considering fairness concerns into pessessing fairness concerns, there exists a Pareto improvement of the profits of both channel members, and the co-op advertising can coordinate the supply chain under certain conditions if the retailer has fairness concerns.