An analysis of manufacturer–retailer supply chain coordination in cooperative advertising

An analysis of manufacturer–retailer supply chain coordination in cooperative advertising

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Article ID: iaor20032339
Country: United States
Volume: 33
Issue: 3
Start Page Number: 469
End Page Number: 494
Publication Date: Jul 2002
Journal: Decision Sciences
Authors: , ,
Keywords: game theory
Abstract:

In the literature of cooperative (co-op) advertising, the focus of the research is on a relationship in which a manufacturer is the leader and retailers are followers. This relationship implies the dominance of the manufacturer over retailers. Recent market trends have shown a shift in power from manufacturers to retailers. Retailers, as a result, may now possess equal or even greater power than a manufacturer in some instances when it comes to retailing. Based on this new market phenomenon, we intend to explore the role of co-op advertising in a manufacture–retailer supply chain through brand name investments, local advertising expenditures, and sharing rules of advertising expenses. Two co-op advertising models are developed and compared. The first co-op advertising model is based on the traditional leader–follower relationship of a manufacturer and retailer. The second model incorporates partnership into co-op advertising coordination. Business examples and managerial implications of the models have been discussed. A cooperative bargaining technique is utilized to implement the partnership co-op advertising model.

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