Cooperative Advertising Models in O2O Supply Chains with Fairness Concerns

Abstract

The Media Resource Replacement Plans (MRRPs) of the online retail platforms have been widely used as a more advanced cooperative advertising strategy nowadays. MRRPs means that the manufacturer embodies the brand visual elements of the online platform in her national advertising, and the online retail platform shares the corresponding advertising cost with the manufacturer. In this paper, we consider an O2O supply chain consisting of an online retail platform and a manufacturer with fairness concerns. We consider cooperative advertising strategies for this O2O supply chain and investigate three game-theoretical models, namely, N-Model, CN-Model, and CF-Model. We derive the optimal decisions of advertising efforts and participation rates between the supply chain members, and explore how they are linked to the interrelationship between the O2O channels and other system parameters. Applying the equilibrium analysis, we find that only when the cross-selling effect of online channels reaches a certain level, manufacturers are eligible to participate in the MRRPs of online retail platforms, Participating in MRRPs can increase the profits of O2O supply chain members(both manufacturer and online retail platform). We also discuss the impact of manufacturers' fairness concerns on O2O supply chain cooperative advertising strategies.