scholarly journals Modelling cooperative advertising decisions in a manufacturer-distributor-retailer supply chain using game theory

2020 ◽  
Vol 30 (2) ◽  
pp. 147-176
Author(s):  
Peter Ezimadu
Keyword(s):  
Game Theory ◽  
Supply Chain ◽  
Optimal Strategy ◽  
Cooperative Advertising ◽  
Subsidy Rate ◽  
Differential Game Theory ◽  
Advertising Effort ◽  
Advertising Strategies ◽  
Channel Structures ◽  
Stackelberg Leader

This work considers cooperative advertising decisions in a manufacturer-distributor-retailer supply chain, where the manufacturer is taken as the Stackelberg leader, using differential game theory. The distributor and retailer are the first and the second followers, respectively. We introduce the distributor into the traditional manufacturer-retailer channel through his direct involvement in advertising as being incorporated into the non-stochastic Sethi's sales-advertising dynamics. This is used to model the awareness share dynamics in which the distributor and the retailer directly engage in advertising, while the manufacturer bypasses the distributor to subsidise only the retail advertising effort. We consider a subsidised and unsubsidised channel structures, where each structure results in a system of three nonlinear equations, which cannot be solved analytically, but only numerically. However, we show that the unique solution to each of the systems exists, provided certain conditions are satisfied. The distributor and the retailer's advertising strategies are developed for both when subsidy is provided and when it is not provided. We also obtain the manufacturer's subsidy rate and the market awareness share for both when retail advertising is subsidised and when it is not subsidised. We observe that with the provision of subsidy, the distributor reduces his advertising effort. However, the resulting increase in the retail advertising effort is larger than the reduction in the distributor's advertising commitment, thus making the channel advertising effort larger with subsidy. It further shows that to avoid being shortchanged, each player should adopt only his optimal strategy or strategies as the case may be.

scholarly journals Modeling dynamic cooperative advertising in a decentralized channel

2018 ◽  
Vol 28 (4) ◽  
pp. 539-566
Author(s):  
Peter Ezimadu ◽  
Chukwuma Nwozo
Keyword(s):  
Game Theory ◽  
Differential Game ◽  
Stackelberg Equilibrium ◽  
Cooperative Advertising ◽  
Direct Involvement ◽  
Differential Game Theory ◽  
Advertising Effort ◽  
Supply Channel ◽  
Channel Structures ◽  
Stackelberg Leader

This work deals with cooperative advertising in a manufacturer-retailer supply channel using differential game theory. It considers the manufacturer as the Stackelberg leader and the retailer as the follower. It incorporates the manufacturer?s advertising effort into Sethi?s sales-advertising dynamics, and considers its effect on the retail advertising effort, the awareness share, the players? payoffs, and the channel payoff. These are achieved by considering two channel structures: a situation where retail advertising is subsidized, and a situation where it is not. In both situations, it obtains the Stackelberg equilibrium, which characterizes the effects of the manufacturer?s advertising effort, including the relationships between the manufacturer?s advertising effort and the retailer?s advertising effort. The work shows that the direct involvement of the manufacturer in advertising is worthwhile.

scholarly journals Cooperative Advertising in a Supply Chain with Horizontal Competition

2013 ◽  
Vol 2013 ◽  
pp. 1-16 ◽  
Author(s):  
Yi He ◽  
Qinglong Gou ◽  
Chunxu Wu ◽  
Xiaohang Yue
Keyword(s):  
Game Theory ◽  
Decision Making ◽  
Supply Chain ◽  
Numerical Analysis ◽  
Open Loop ◽  
Channel Member ◽  
Cooperative Advertising ◽  
Horizontal Competition ◽  
Differential Game Theory ◽  
Advertising Strategies

Cooperative advertising programs are usually provided by manufacturers to stimulate retailers investing more in local advertising to increase the sales of their products or services. While previous literature on cooperative advertising mainly focuses on a “single-manufacturer single-retailer” framework, the decision-making framework with “multiple-manufacturer single-retailer” becomes more realistic because of the increasing power of retailers as well as the increased competition among the manufacturers. In view of this, in this paper we investigate the cooperative advertising program in a “two-manufacturer single-retailer” supply chain in three different scenarios; that is, (i) each channel member makes decisions independently; (ii) the retailer is vertically integrated with one manufacturer; (iii) two manufacturers are horizontally integrated. Utilizing differential game theory, the open-loop equilibrium-advertising strategies of each channel member are obtained and compared. Also, we investigate the effects of competitive intensity on the firm’s profit in three different scenarios by using the numerical analysis.

scholarly journals Coordinating Pricing and Advertising Decisions for Supply Chain under Consignment Contract in the Dynamic Setting

Complexity ◽  
2018 ◽  
Vol 2018 ◽  
pp. 1-11 ◽  
Author(s):  
Zhihui Wu ◽  
Lichao Feng ◽  
Dongyan Chen
Keyword(s):  
Supply Chain ◽  
Differential Game ◽  
Optimal Strategies ◽  
Feasible Region ◽  
Comparison Analysis ◽  
On Demand ◽  
Dynamic Setting ◽  
State Dependent ◽  
Differential Game Theory ◽  
Advertising Effort

In this paper, via the differential game method, the problems of the pricing and advertising decision are investigated by considering the effect of number of the platform users on demand. In addition, a novel contract is developed to coordinate the supply chain. Firstly, the optimal strategies of the pricing and advertising are given in the decentralized and centralized scenarios by applying the differential game theory. Also, the comparison analysis concerning on the optimal strategies is proposed in two decision scenarios. It is shown that the centralized scenario could lead to the higher advertising effort of each member and a lower retail price. Next, we construct the state-dependent contract with hope to coordinate the supply chain and then improve the performance of the supply chain. Finally, a numerical example is provided to illustrate the impacts of the price-elasticity index of demand and the effectiveness of the number of retailer’s platform users onto the feasible region of the corresponding contract.

Channel coordination through quality improvement with brand halo effect

2019 ◽  
Vol 53 (4) ◽  
pp. 1407-1425
Author(s):  
Qingyun Xu ◽  
Bing Xu ◽  
Yi He
Keyword(s):  
Game Theory ◽  
Supply Chain ◽  
Quality Improvement ◽  
Quality Management ◽  
Halo Effect ◽  
Transfer Payment ◽  
Channel Coordination ◽  
Payment Policy ◽  
Differential Game Theory ◽  
Subsidy Program

Product quality depends on the quality investment of the manufacturer and quality decisions of the supplier. Therefore, many firms and researchers pay considerable attention to supply quality management. Considering a supply chain that includes two competing suppliers and one manufacturer, this paper investigates the influences of competition and the “brand halo” effect on the quality strategies of channel members, and explores the potential coordinating power of the bilateral participation contract. Utilizing differential game theory, this paper compares and analyzes the quality strategies of all channel members under three different scenarios: (i) decentralized scenario within a subsidy program, (ii) integrated scenario, and (iii) bilateral participation contract. Our results confirm the following results. (1) The manufacturer may not grant a subsidy to the supplier if two final products are highly competitive. (2) Supply chain members are more likely to join the bilateral participation contract if the “brand halo” effect is large. (3) The bilateral participation contract can achieve perfect coordination if the competition is weak or if a transfer payment policy exists.

Optimal Strategy of Social Responsibility and Quality Effort in Service Supply Chain with Quality Preference

2018 ◽  
Vol 35 (03) ◽  
pp. 1850018 ◽  
Author(s):  
Cui-Hua Zhang ◽  
Peng Xing ◽  
Jin Li
Keyword(s):  
Game Theory ◽  
Supply Chain ◽  
Social Responsibility ◽  
Numerical Simulations ◽  
Optimal Strategy ◽  
Mathematical Reasoning ◽  
Optimal Strategies ◽  
Utility Functions ◽  
Decision Models ◽  
Service Supply Chain

We investigate the optimal strategy of service supply chain (SSC) including one integrator and two suppliers under a two-layer game structure. Service integrator decides social responsibility and service price, while the two service suppliers with quality preference determine their quality efforts, respectively. By analyzing the two-layer game structure and eight different scenarios of decision models (i.e., CD, DD, ICD, IDD, ISD, SCD, SDD, and SSD), we establish members’ utility functions under different decision models. Meanwhile, based on game theory, the optimal strategies of SSC are obtained. Mathematical reasoning and numerical simulations show that, firstly, quality preference has impact on optimal strategy and members’ utilities under different constraints. Secondly, utility of supply chain with integrator as a leader is greater than the case with suppliers as the leader.

scholarly journals Inter-organizational contract control of advertising strategies in the supply chain

2021 ◽  
Vol 0 (0) ◽  
pp. 0
Author(s):  
Yafei Zu
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Dynamic Effect ◽  
Sensitivity Analyses ◽  
Pricing Strategies ◽  
Stackelberg Differential Game ◽  
Contract Choice ◽  
Advertising Effort ◽  
Advertising Strategies ◽  
Contract Selection

<p style='text-indent:20px;'>Advertising has a crucial impact on a product's goodwill. To further improve a product's goodwill and make more profit, member firms in the supply chain use various contracts to coordinate the channel. Considering the dynamic effect of advertising, this paper studies a two-level supply chain consisting of one manufacturer and one retailer. The two members focus on maximizing their profits through advertising and pricing strategies under two types of contracts: the wholesale price contract and the consignment contract. The Stackelberg differential game is introduced, and the optimal advertising effort, wholesale and retail pricing strategies in the two situations are studied. Numerical examples and sensitivity analyses are conducted to explore the models further. The results show that the retailer's revenue proportion and the product's goodwill according to consumers significantly affect the strategies and the contract choice of the partner firms in the supply chain. A proportion of too high or too low revenue may lead to a contract selection conflict between the two partner firms. However, when consumers care more about the product's goodwill, this contract selection conflict can be weakened.</p>

scholarly journals Coordination of Cooperative Advertising in a Two-Period Fashion and Textiles Supply Chain

2014 ◽  
Vol 2014 ◽  
pp. 1-10 ◽  
Author(s):  
Yi He ◽  
Zhiying Liu ◽  
Khalid Usman
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Channel Member ◽  
Cooperative Advertising ◽  
Cooperative Program ◽  
Advertising Strategies ◽  
Decision Making Framework ◽  
The One ◽  
Over Time

Previous studies related to cooperative advertising mainly focus on the one-period supply chain. In the fashion and textiles (FT) supply chain, the demand of most FT products (fashion clothing, vogue handbags, fashion shoes, and so on) varies over time due to the trends of fashion. In these conditions, a decision-making framework with a multiple-period supply chain becomes more realistic. In view of this, we investigate the optimal cooperative advertising strategies in a two-period FT supply chain consisting of a manufacturer and a retailer in two different scenarios: (i) each channel member makes decisions within a cooperative program; (ii) the retailer is vertically integrated with a manufacturer. Also, we introduce a two-way subsidy contract to coordinate the supply chain.

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