Research On The Interaction Between R&D Or Advertising Decision And Channel Structure

Nowadays,the competition between enterprises has evolved into the competition between supply chains,so we have to consider the problem as well as optimize and manage the resources and activities of the supply chain from the perspective of the entire supply chain system.During the process of supply chain’s operation,one of the major decision any manufacturer faces is the design of distribution channels.The good channel structure can create a significant competitive advantage for enterprises.Enterprises must consider other influencing factors at the selection of channels,and this paper examines the impact of R&D based on cost reduction and advertising on channel choice.The company invests in process improvement and then provides products or services in a unique low-cost way that would reduce prices,thereby increasing market demand.Meanwhile,R&D cooperation can achieve complementary advantages and the sharing of benefits and venture.Advertising is a competitive weapon as well,for it can promote the sale of products directly.It’s not hard to notice that corporate R&D and advertising activities affect customer needs in different ways of operating,thereby affecting the channel choice of the enterprise,so we do some research on two kinds of corporate behavior respectively.In addition to their own decisions,enterprises should always pay attention to the trends of other companies within the industry.Competitors are not ignored easily,but there is also a significant market power to affect the competitive position of enterprises,namely the complements-manufacturing company.We shouldn’t ignore the close relationship between complements-producing companies.Based on the above understanding,we use game theory to study the impact of independent R&D and R&D collaboration or advertising decisions on the channel selection of producers under alternative and complementary products,and compare the results of alternative and complementary products.Major findings are summarized as follows:(1)In the independent R&D scenario,decentralization(DD)is always an equilibrium strategy when the manufacturers’ products are highly substitutable or complementary.The difference is that as spillovers increase,the decentralized equilibrium of substitute products becomes more likely,but the one of complementary products is opposite.(2)Horizontal cooperation in process investments mainly affects the equilibrium channel choice of complements-manufacturing companies,and higher spillovers make decentralization more likely.However,vertical cooperation has a major influence on the equilibrium channel choice of substitutes-manufacturing companies,and channel coordination by both manufacturers(II)is no more an unlimited perfect equilibrium strategy.(3)In the advertising scenario,(II)is always an equilibrium,but the mixed structure may be a dominant equilibrium strategy at high substitutability and severely channel asymmetry.