Retail promotions with negative brand image effects: Is cooperation possible?

Retail promotions with negative brand image effects: Is cooperation possible?

0.00 Avg rating0 Votes
Article ID: iaor20043181
Country: Netherlands
Volume: 150
Issue: 2
Start Page Number: 395
End Page Number: 405
Publication Date: Oct 2003
Journal: European Journal of Operational Research
Authors: , ,
Keywords: supply, game theory
Abstract:

We consider a channel of distribution with a single manufacturer M and a retailer R. M advertises in national media to build up the image for one his brands. R promotes locally the brand to increase sales revenue, but these efforts are harmful to the brand image. We address the question whether the two firms can agree to participate in a cooperative promotion program where M pays part of the costs incurred by R when promoting the brand. The model is a differential game with an infinite time horizon. Two Nash equilibria serve as benchmarks for assessing the feasibility of the cooperative program: one in which R is myopic and one in which R is far-sighted. Our results show that a cooperative program is implementable if the level of initial brand image is “small”, or if the level of initial brand image is “intermediate” and promotion is not too damaging to the brand image. In the remaining cases a game without promotional support is played and R should behave myopically in such cases.

Reviews

Required fields are marked *. Your email address will not be published.