An integrative framework of cooperative advertising: Should manufacturers continuously support retailer advertising?

Martín‐Herrán, Guiomar; Sigué, Simon-Pierre

doi:10.1016/j.jbusres.2016.07.005

Cited by 29 publications

(14 citation statements)

References 32 publications

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“…A considerable number of studies examined the benefits of co-op advertising for channel members in a "one-manufacturer one-retailer" supply chain (Dant and Berger, 1996;Huang and Li, 2001;Li et al, 2002;Yue et al, 2006;Xie and Neyret, 2009;Xie and Wei, 2009;Yang et al, 2013;He et al, 2014;Zhao et al, 2016;Martín-Herrán and Sigué, 2017). Among these studies, Huang and Li (2001) discussed three cooperative advertising models, namely, two non-cooperative games and one cooperative game, wherein the latter maximizes the system profit.…”

Section: K 486mentioning

confidence: 99%

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

et al. 2019

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Purpose Most 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/approach By utilizing the game theory, this study developed a cooperative advertising model that considers the element of retailer competition in a two-period supply chain. Findings The 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/implications First, 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 implications This 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/value Most 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.

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Section: K 486mentioning

confidence: 99%

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

et al. 2019

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“…In particular, Rubel and Prasad [21] propose a dynamic model with present selling efforts, drive sales and show that a salesperson with low risk aversion exerts effort to decrease attrition from existing business, whereas a salesperson with high risk aversion does not. Martin-Herran and Sigue [24] then develop a model where, besides pricing decisions, the retailer and manufacturer can set their advertising and cooperative advertising support rates for each period and reveal that the manufacturer may change his advertising support over time depending on the nature of the long-term effects of retailer advertising. Subsequently, Wang et al [25] focus on the manufacturer's two main customer satisfaction incentives for the retailer: customer satisfaction index bonus (CSI bonus) and customer satisfaction assistance (CS assistance) and find that, if the manufacturer has weak market pricing power, then she should only offer CS assistance but not CSI bonus to the retailer when the market wholesale price is relatively low.…”

Section: Literature Reviewmentioning

confidence: 99%

A Sustainability Analysis on Retailer’s Sales Effort in A Closed-Loop Supply Chain

Yang

Zhang

et al. 2018

Sustainability

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With the development of the Internet, many brand name manufacturers including Apple, Lenovo, and Canon offer remanufactured products through their official website. Confronting the competition from remanufactured products that are available from the manufactured-owned channel, more and more retailers have recognized that customer service level is one of the most important performance metrics and have aggressively attempted to obtain larger market shares by providing high levels of post-sale services. Although numerous researchers have studied various competitive strategies in remanufacturing, to the best of our knowledge, there is little research highlighting whether and how economic performance and sustainability issues related to remanufacturing operations are affected by the retailer's service levels. In this paper, we fill this gap by developing two models for the closed-loop supply chain where all remanufactured products are available from the manufactured-owned channel, while the equilibrium behavior of the retailer can be characterized under two possible scenarios: (1) Confronting the cannibalization from direct channels where the retailer only responds on prices (i.e., Model P); or (2) on providing competitive prices and high service levels for new products (i.e., Model S). Our analysis suggests that, from managers' perspective, if the manufacturers care more about economic benefits, encouraging the retailer to provide higher levels of post-sale services is a beneficial strategy. If they are more concerned with environmental performance, Model P is preferred. However, from the angle of environmental groups and agencies, if the level of eco-centrism is too pronounced, though Model S has a greater profitability for both parties, a more significant welfare loss due to environmental hazard is perceived by the society. As a result, besides avoiding indulging in overproducing on new products, environmental groups and agencies should take emissions trading or taxation into consideration to stimulate remanufacturing operations.

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“…Without cooperative advertising, the retailer's advertising effort tends to be lower than the manufacturer's expectation (Zhao et al., 2016). Thus, the optimal design of cooperative advertising has attracted much attention from scholars (Martín‐Herrán and Sigué, 2017; Chutani and Sethi, 2018; Chatterjee et al., 2019; Du et al., 2019). However, most studies of cooperative advertising and pricing focus on the supply chain consisting of one manufacturer and one retailer, and a few studies focus on competition scenario.…”

Section: Introductionmentioning

confidence: 99%

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

Zhang

Bin

2020

Int Trans Operational Res

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This 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.

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An integrative framework of cooperative advertising: Should manufacturers continuously support retailer advertising?

Abstract: A two-period game is developed in a bilateral monopoly where, besides pricing decisions, the retailer and manufacturer can set their advertising and cooperative advertising support

Cited by 29 publications

References 32 publications

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

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

A Sustainability Analysis on Retailer’s Sales Effort in A Closed-Loop Supply Chain

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

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