Dynamic cooperative advertising under manufacturer and retailer level competition
We study dynamic cooperative advertising decisions in a market that consists of a finite number of independent manufacturers and retailers. Each manufacturer sells its product through all retailers and can offer different levels of advertising support to the retailers. Each retailer sells every manu...
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| Format: | Article |
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Elsevier
2018
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| Online Access: | https://eprints.nottingham.ac.uk/50676/ |
| _version_ | 1848798312270921728 |
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| author | Chutani, Anshuman Sethi, Suresh P. |
| author_facet | Chutani, Anshuman Sethi, Suresh P. |
| author_sort | Chutani, Anshuman |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | We study dynamic cooperative advertising decisions in a market that consists of a finite number of independent manufacturers and retailers. Each manufacturer sells its product through all retailers and can offer different levels of advertising support to the retailers. Each retailer sells every manufacturer’s product and may choose to carry out a different amount of local advertising effort to promote the products. A manufacturer may offer to subsidize a fraction of the local advertising expense carried out by a retailer for its product, and this fraction is termed as that manufacturer’s subsidy rate for that retailer. We model a Stackelberg differential game with manufacturers as leaders and retailers as followers. A Nash game between the manufacturers determines their subsidy rates for the retailers and another Nash game between the retailers determines their optimal advertising efforts for the products they sell in response to manufacturers’ decisions. We obtain optimal policies in feedback form. In some special cases, we explicitly write the incentives for coop advertising as functions of different model parameters including the number of manufacturers and retailers, and study the impact of the competition at the manufacturer and the retailer levels. We analyse the profits of the players and find the model parameters under which a manufacturer benefits from a coop advertising program. Furthermore, in the case of two manufacturers and two retailers, we study the effect of various model parameters on all four subsidy rates. We also extend our model to include national level advertising by the manufacturer. |
| first_indexed | 2025-11-14T20:17:46Z |
| format | Article |
| id | nottingham-50676 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T20:17:46Z |
| publishDate | 2018 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-506762020-05-04T19:46:31Z https://eprints.nottingham.ac.uk/50676/ Dynamic cooperative advertising under manufacturer and retailer level competition Chutani, Anshuman Sethi, Suresh P. We study dynamic cooperative advertising decisions in a market that consists of a finite number of independent manufacturers and retailers. Each manufacturer sells its product through all retailers and can offer different levels of advertising support to the retailers. Each retailer sells every manufacturer’s product and may choose to carry out a different amount of local advertising effort to promote the products. A manufacturer may offer to subsidize a fraction of the local advertising expense carried out by a retailer for its product, and this fraction is termed as that manufacturer’s subsidy rate for that retailer. We model a Stackelberg differential game with manufacturers as leaders and retailers as followers. A Nash game between the manufacturers determines their subsidy rates for the retailers and another Nash game between the retailers determines their optimal advertising efforts for the products they sell in response to manufacturers’ decisions. We obtain optimal policies in feedback form. In some special cases, we explicitly write the incentives for coop advertising as functions of different model parameters including the number of manufacturers and retailers, and study the impact of the competition at the manufacturer and the retailer levels. We analyse the profits of the players and find the model parameters under which a manufacturer benefits from a coop advertising program. Furthermore, in the case of two manufacturers and two retailers, we study the effect of various model parameters on all four subsidy rates. We also extend our model to include national level advertising by the manufacturer. Elsevier 2018-07-16 Article PeerReviewed Chutani, Anshuman and Sethi, Suresh P. (2018) Dynamic cooperative advertising under manufacturer and retailer level competition. European Journal of Operational Research, 268 (2). pp. 635-652. ISSN 0377-2217 OR in marketing; Cooperative advertising; Differential games; Feedback Stackelberg equilibrium https://www.sciencedirect.com/science/article/pii/S0377221718301425 doi:10.1016/j.ejor.2018.02.027 doi:10.1016/j.ejor.2018.02.027 |
| spellingShingle | OR in marketing; Cooperative advertising; Differential games; Feedback Stackelberg equilibrium Chutani, Anshuman Sethi, Suresh P. Dynamic cooperative advertising under manufacturer and retailer level competition |
| title | Dynamic cooperative advertising under manufacturer and retailer level competition |
| title_full | Dynamic cooperative advertising under manufacturer and retailer level competition |
| title_fullStr | Dynamic cooperative advertising under manufacturer and retailer level competition |
| title_full_unstemmed | Dynamic cooperative advertising under manufacturer and retailer level competition |
| title_short | Dynamic cooperative advertising under manufacturer and retailer level competition |
| title_sort | dynamic cooperative advertising under manufacturer and retailer level competition |
| topic | OR in marketing; Cooperative advertising; Differential games; Feedback Stackelberg equilibrium |
| url | https://eprints.nottingham.ac.uk/50676/ https://eprints.nottingham.ac.uk/50676/ https://eprints.nottingham.ac.uk/50676/ |