Feedback Nash Equilibrium for Dynamic Brand and Channel Advertising in Dual Channel Supply Chain

This paper investigates dynamic brand and channel advertising and their effects on market expansion and market share in a dual channel supply chain by using differential game theory. Nash equilibrium of the differential game will be obtained by the feedback approach. A sensitivity analysis was performed to assess the impact of key parameters on optimal strategies and to characterize behaviors of both the manufacturer and retailer over time. Comparative statistics show that a higher compatibility of a product with online marketing leads to a higher advertising effort for the online channel by the manufacturer, an enhanced steady state for demand of the brand as well as greater sales in the steady state through the online channel.