Cooperative Advertising Strategies Research Articles

Advertising strategies of one e-commerce platform and competitive sellers in a supply chain under agency mode

As the internet traffic dividend disappears, the growth of e-commerce platforms slows and competition among sellers increases. We examine whether the sellers choose to cooperate with the e-commerce platform in advertising. This paper considers advertising strategies in a supply chain with one e-commerce platform and two competitive sellers, where each seller can choose either cooperative advertising or independent advertising in a strategic game. This paper shows that the cooperative advertising strategy is a unique Nash equilibrium. Only when a seller has a relatively high revenue share ratio in the cooperative venture, and competition with the other seller is low, will the seller obtain higher profits with cooperative advertising than independent advertising. After competition increases to a certain level, the sellers fall into the prisoner’s dilemma. Cooperative advertising can increase the profits of the platform. It is better for the platform to cooperate with two sellers than with only one seller. Besides, a seller’s market share can also impact its advertising strategy. Previous studies were mainly based on traditional supply chains in the wholesale mode where the platform acts as a retailer. Our paper considers the supply chains under the agency mode where sellers compete on price and advertising.

Research on cooperative advertising strategies for dual channel supply chain of fresh agricultural products considering carbon reduction efficiency under retailer leadership.

With the development of low-carbon economy and the dominant position of retailers, through the establishment and comparison of three cooperative advertising models: model of supplier's independent advertising, model of supplier's independent advertising and model of retailer's and supplier's cooperative advertising, this paper studies the cooperative advertising decision-making of fresh agricultural products supply chain with two channels, and the demand of both channels is affected by the level of advertising investment, the proportion of advertising cost sharing and the efficiency of carbon emission reduction. The results show that when supplier and retailer adopt the two-way cooperative advertising mode, the demand and profit level of the two channels reach the optimal level. Numerical analysis shows that carbon emission reduction efficiency has an important impact on profits and market demand, which is closely related to cooperative advertising strategy.

Digital advertising spillover, online-exclusive product launches, and manufacturer-remanufacturer competition

Manufacturers launch and advertise new generations of products through e-retailers. However, this advertising effort also benefits independent remanufacturers selling the previous generation of the same product online because of product recommendation algorithms and consumer category search. Through a stylized game-theoretic model, we investigate how independent, arm’s-length, and cooperative digital advertising strategies by a manufacturer and e-retailer unintentionally displace the sales of a new product to the benefit of an independently remanufactured alternative due to digital advertising spillover. We consider the manufacturer’s and remanufacturer’s relative production costs, the degree of substitutability between the two products, and the degree to which advertising spillover from the new product to the remanufactured product occurs. Further investigating the latter issue, we also consider that the remanufacturer’s advertising may spill over to the new product’s benefit, although at a comparatively weak level. Our results explore the optimal digital advertising strategy and effort in different conditions. We give recommendations to the manufacturer to maximize profits, which sometimes, unintuitively, involves sacrificing sales quantity and wholesale price under a cooperative advertising strategy to reduce advertising expenditures that would otherwise significantly benefit the remanufacturer’s product. A numerical analysis shows our findings to be robust and in an extension we explore the scenario that the manufacturer possesses its own direct channel.

Dynamic Game Analysis on Cooperative Advertising Strategy in a Manufacturer-Led Supply Chain with Risk Aversion

This paper considers a dynamic Stackelberg game model for a manufacturer-led supply chain with risk aversion. Cooperative advertising strategy is applied to the marketing decisions of supply chain participants. Based on Stackelberg game and system dynamic theory, the game and complex dynamical behaviors are studied through the use of several methods, such as the stability region of the system, bifurcation diagram, attractor diagram, and the largest Lyapunov exponent diagram. The expected utilities of participants are given and compared by numerical simulation. The results illustrate that a series of variations in adjustment speed of advertising expenditure, participation rate of local advertising expenditure by manufacturer, risk tolerance levels, and the effect coefficient of advertising expenditure may cause a loss of stability to the system and evolve into chaos. Meanwhile, the Nash equilibrium point and the expected utility of the manufacturer and retailer will change greatly. The parameter control method is further applied to control the chaos phenomenon of the system effectively. By means of analyzing the impact of relevant factors on the game model, the manufacturer and retailer can make optimal strategy decisions in the supply chain competition. The findings of this study mainly include the following three aspects. Firstly, for market stability and maximizing revenue, the manufacturer adjusts the participation rate appropriately, avoiding too high or too low values. Secondly, the manufacturer will try to reduce their own risk tolerance level for the economic revenue, and the retailer appropriately adjust the risk tolerance level to adapt to their own development according to their own enterprise strategy. Finally, both the manufacturer and retailer reduce their own effect coefficients of advertising expenditure. Meanwhile, they will attempt to increase their opponent’s effect coefficient to gain the most revenue. The research results of this study can provide important reference for the advertising expenditure decision and revenue maximization of participants in the context of risk aversion.

Optimal product customization and cooperative advertising strategies in supply chain with social influence

With the rise of information technology and social media, customers’ desire for personalized products has gained attention from merchants. They have adjusted production and marketing strategies to encourage individualization and gather customer information for more targeted promotions. We studied product customization and advertising decisions in a dual-channel supply chain, analyzing both decentralized and centralized decision-making scenarios. Our research found that when demand for customized products is low, but demand for standard products is high, it is most beneficial for both sides of the supply chain to make decisions. Additionally, cooperative advertising can improve supply chain performance, and centralized decision-making yields greater profits than decentralized decision-making. These findings can inform retailers’ participation in cooperative advertising and manufacturers’ promotion of customized products.

Research on the optimization of cooperative advertising strategy in the promotion of water-saving products based on differential game

Abstract The promotion of water-saving products is one of the vital ways to implement water conservation action, and advertising is a significant way to promote water-saving products. Taking the two-level Supply Chain consisting of a leading manufacturer and a retailer as an example and considering the advertising cost-sharing ratio of the two, as well as the government's R&D subsidies to manufacturers and product subsidies to consumers, this study establishes differential game models in three cases, that is, non-cooperative contract without cost sharing, cooperative contract with cost sharing, and collaborative cooperation contract. Also, numerical simulation is adopted to analyze the sensitivity of important parameters. The results show that the product goodwill and market demand for water-saving products can achieve Pareto optimality under the collaborative cooperation contract. In addition, the cooperative contract with cost sharing can realize Pareto improvement of the optimal benefit of the Supply Chain under certain conditions. Moreover, in the absence of the government's R&D subsidies, the overall benefits can achieve Pareto optimality under the collaborative cooperation contract. This study provides theoretical guidance and reference for the advertising cooperation strategy for the main bodies in the Supply Chain.

How cooperative advertising interacts with distributional contracts in a dual-channel system

With the development of E-commerce, an increasing number of online platforms are conducting advertising campaigns to expand their sales. In some situations, the manufacturer is willing to share the advertising cost, while in others it is not. Additionally, recently, many online platforms have started choosing an agency contract, instead of a wholesale contract, to obtain a predetermined proportion of revenue from the manufacturer to make profits. This paper studies a scenario of a manufacturer selling through both a direct channel and a platform channel to investigate the interaction between a manufacturer’s cooperative advertising strategy and a platform’s distribution contract choice. We develop a stylized model based on game theory to drive the optimal prices and advertising level under different contracts. By using a representative consumer function, we drive the following interesting results. Firstly, under the wholesale contract, a manufacturer prefers cooperating only when the cost-sharing rate is small, but under an agency contract, when the revenue-sharing rate is large, the manufacturer will not choose to cooperate even if the cost-sharing rate is low. Secondly, the platform’s profit does not always increase in the revenue-sharing rate. Finally, under some conditions, the platform would prefer that the manufacturer not share the cost. Specifically, when the competition intensity is small and the revenue-share rate is high, the platform would rather choose an agency contract to cover all advertising costs on its own than a wholesale contract where the manufacturer is willing to share advertising costs. We also consider direct channel advertising as well in an extension, and the qualitative results still hold.

Cooperative Advertising Strategy Selection Problem for considering Pricing and Advertising Decisions in a Two-Period Online Supply Chain

This article studies the cooperative advertising problem of a two-period online supply chain consisting of a manufacturer and an online retail platform. The manufacturer provides national advertising in the first period to build the brand image and increase the awareness of the product. And the online retail platform provides platform advertising for selling the product to consumers on its platform during two periods. The manufacturer and the online retail platform may choose different cooperative advertising strategies for national advertising and platform advertising, which are one-way subsidy strategy, two-way subsidy strategy, and revenue-share strategy. We formulate a Stackelberg game model to study the cooperative advertising problem by taking price and advertising effect into account and analyze how the profit is influenced in different cooperative advertising strategies. We find that under the revenue-share strategy, the manufacturer provides a higher subsidy rate for the online retail platform advertising than that in other cooperative advertising strategies. Interestingly, there are conditions where, while just the manufacturer contributes a percentage of the platform advertising and the online retail platform has no effort on the national advertising, the total profit would be better than that in revenue-share strategy even in revenue-share strategy, the cooperative relationship is closer between the manufacture and the online retail platform.

A Research on Cooperative Advertising Strategy in Supply Chain Based on Fairness Preference of the Distributors

A Research on Cooperative Advertising Strategy in Supply Chain Based on Fairness Preference of the Distributors

Dynamic cooperative advertising strategy in OAO supply chain with customer return

Nowadays many manufacturers are increasingly adopting their own online direct channel and the offline retail channel to sell their products as the quick development of e-commerce and third party logistics. To gain more and more market share, the manufacturer and the retailer implement unconditional return strategy, which does not affect secondary sales. We build a differential game model for the optimal advertising and the optimal advertising cost sharing proportion for centralized and decentralized OAO (Online and Offline) supply chain considering customer returns rates. We further analyze how the returns rates affect the optimal decisions of the manufacturer and the retailer. The results show that the returns rates, the brand reputation and the influence factors of retail channel goodwill on demand of online direct channel strongly influence the optimal advertising decisions. Furthermore, the retailer does not support for the manufacturer advertising efforts in Stackelberg game. Compared with the centralized OAO supply chain, the decentralized system results in channel inefficiency. To coordinate the channels, we design a two-way advertising cost-sharing contract. By this contract, each member of the supply chain reaches a win-win situation and is willing to cooperate. Numerical studies verify the conclusions of this paper.

Cooperative advertising and pricing in an O2O supply chain with buy‐online‐and‐pick‐up‐in‐store

AbstractThis paper investigates the effectiveness of cooperative advertising in an online‐to‐offline (O2O) supply chain where the manufacturer cooperates with the retailer to implement buy‐online‐and‐pick‐up‐in‐store (BOPS) strategy. Considering the coexistence of channel cooperation and channel competition after the implementation of BOPS, we investigate the impact of BOPS on equilibrium results. Then we study the optimal cooperative advertising and pricing strategy of the O2O supply chain. We also identify the effectiveness of cooperative advertising on the O2O supply chain and supply chain members. We find that the implementation of BOPS can partially substitute the incentive effect of cooperative advertising. In addition, convenience coefficient and commission rate, the two key factors of BOPS, have opposite impacts on optimal decisions in most conditions. Therefore, the optimal strategy depends on the balance of the above two factors. Furthermore, we find that cooperative advertising does not always benefit the O2O supply chain and its members.

When retailers and manufacturers advertise together; examining the effect of co-operative advertising on ad reach and memorability

Retailers often feature manufacturer brands in their advertising with the aim to drive sales for those brands and, at the same time, increase in-store traffic. The adoption of such co-operative advertising strategies should reach an expanded audience base comprising of store and brand buyers. Based on empirical evidence in non-retail settings, these buyers are more likely to remember the advertising than non-buyers. This usage-bias effect implies that co-operative advertisements achieve greater cut through than would be the case if either brand advertised alone. Our paper tests this hypothesis in the context of retailer advertisements that feature manufacturer brands in the US, UK and Australia. Our results confirm that a retail brand's shoppers are more likely to recall its advertisements than non-shoppers, extending the usage-bias generalisation to a retailing context. However, while co-operative advertising does expand the buyer-base reach, any uplift in ad-memorability is negated by a reduced ability for buyers of only one of the two brands to recall the advertisement. Information overload on cognitive processing is a possible explanation for this finding, and has implications for extracting value from any investment in co-operative advertising.

An analysis of efficiency of time-consistent coordination mechanisms in a model of supply chain management

In this paper, we study an advertising dynamic game in supply chain management under the assumption that the agents differ in their time preference rates. We study two coordination mechanisms: the cost sharing program, where the retailer can get some reimbursement of the advertising cost from the manufacturer; and the vertical integration, where the two players aim to maximize the joint profit. We derive the time-consistent cooperative advertising strategies in each coordination setting, and we compare them with the non-cooperative case. Our results show that, the cost sharing program is Pareto superior to the non-cooperative setting, while vertical integration could be more preferred by the manufacturer and less preferred by the retailer if the initial goodwill level is sufficiently high. Besides, unlike previous results in the literature, we found that when the agents’ discount rates are very different, joint profits could be lower under vertical integration than in the non-cooperative case, which yields an inefficient cooperation.

Coordination through cooperative advertising in a two-period supply chain with retail competition

PurposeMost firms in the fashion industry frequently design and promote new products, which leads to a two-period phenomenon in product sales. This study aims to examine the optimal advertising efforts of each channel member and the subsidy strategies of the manufacturer with retail competition in a two-period supply chain.Design/methodology/approachBy utilizing the game theory, this study developed a cooperative advertising model that considers the element of retailer competition in a two-period supply chain.FindingsThe main results of this study are as follows. An increase in the subsidy rate of one retailer’s advertising cost will lead to a decrease in the share of the other. When a manufacturer’s marginal profit from one retailer is considerably larger than that from the other, the manufacturer will share more advertising cost with the former. This study demonstrates that a bilateral participation contract can achieve supply chain coordination and increases the likelihood of retailers to participate in this contract when competition effect is small.Research limitations/implicationsFirst, product price is not a decision variable in this model. This concern can be studied in future work. Second, the one-manufacturer and two-retailer supply chain can be expanded to competitive manufacturers.Practical implicationsThis study provides some decision references for the manufacturer and retailer on advertising strategies. The manufacturer can also gain insights into cooperative advertising strategy when facing a competitive retail environment.Originality/valueMost previous studies related to cooperative advertising focused on a single-period supply chain. This study investigates cooperative advertising strategy with retail competition in two-period sales and explores the potential coordinating power of a bilateral participation contract.

Selection and optimization of cooperative advertising strategies in supply chain based on stackelberg game method

With the intensification of market competition, the cost of advertising enterprises is increasing, so eventually, advertising may unable to increase the profits of enterprises and bring huge consumptions to enterprises. In this case, cooperative advertising came into being. With the Stackelberg game method, the selection and optimization of cooperative advertising strategies in supply chain were studied. Through the comparative analysis, the related concepts of supply chain competition, the level of cooperative advertising and Stackelberg game were determined; from the structures as two chains that are the non-integrated decision-making and the integrated decision-making, and two chains that are the integrated decision-making and the non-integrated decision-making, the existing problems were modeled and analyzed with the method of Stackelberg game theory; through numerical analysis, the optimal cooperative advertising strategy under the level of horizontal cooperation advertisement for each enterprise in the supply chain was obtained. Theoretical and empirical analysis can provide theoretical supports and model references for the research on strategy selection and optimization of cooperative advertising in other supply chains.

Cooperative advertising models in O2O supply chains

This paper examines cooperative advertising strategies in O2O supply chain made of a seller and an online platform agent. The seller sells a product to end market through both offline and online channels, the latter operated by the agent. We consider cooperative advertising strategies for this O2O supply chain and investigate three models, namely, Integration Model (I-Model), Unilateral co-op advertising model (U-Model), and Bilateral co-op advertising model (B-Model). We derive the optimal decisions of advertisement levels 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. In addition, we provide comparison results among the three models and find that B-model can lead to significant benefits to the seller and the entire channel compared to U-model, especially under a high online profit share for the agent. However, the agent is undermined under B-model as he is obliged to share a portion of offline advertisement expenditure without corresponding compensations, which explains the difficulty in adopting bilateral advertising cooperation in real practice.

Cooperative Search Advertising

Channel coordination in search advertising is an important but complicated managerial decision for both manufacturers and retailers. A manufacturer can sponsor retailers to advertise his products while at the same time compete with them in position auctions. We model a manufacturer and retailers' cooperation and intra-brand competition in advertising, as well as inter-brand competition with other advertisers. We consider a simple coordination mechanism where a manufacturer shares a fixed percentage of a retailer's advertising cost. Our model prescribes the optimal cooperative advertising strategies from the manufacturer's perspective. We find that it can be optimal for a manufacturer not to cooperate with all his retailers even if they are ex ante the same. This reflects the manufacturer's trade-off between a higher demand versus a higher bidding cost resulting from more competition. We also find that an advertiser's position rank in equilibrium is entirely determined by his channel profit per click, no matter he is a manufacturer or retailer. Consequently, when determining whether to advertise directly to consumers or via retailers, a manufacturer should compare his profit per click from direct sales with the retailer's total channel profit per click; similarly, when choosing which retailer to sponsor, a manufacturer should compare their total channel profits per click. We also investigate how a manufacturer uses both wholesaling and advertising contracts to coordinate channels with endogenous retail prices.

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

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.

Cooperative advertising and pricing models in a dynamic marketing channel

This paper studies dynamic pricing and cooperative advertising strategies in a two-member channel of distribution. We propose differential game models that incorporate the carryover effects of advertising over time for both manufacturer and retailer. Two different models are studied. Firstly, we discussed a non-cooperative differential game which the manufacturer supports partially the cost of the promotion activities. Secondly, both channel members cooperatively determine their respective strategies. In these two cases, dynamic cooperative advertising and pricing strategies are characterized. Then numerical simulation method is applied to analyze the sensitivity of main model parameters and compare the main results of the two models. The simulation results show that the cooperative model achieves better coordination than the non-cooperative model with the following features: all channel members achieve higher advertising efforts and profit level in the cooperative case rather than in the non-cooperative case.

The Optimal Cooperative Advertising Strategy in the Retailer Dominant Supply Chain

The Optimal Cooperative Advertising Strategy in the Retailer Dominant Supply Chain