Competitive effects of informative advertising in distribution channels

Zhang, Jianqiang; Wang, Zhong; Mei, Shue

doi:10.1007/s11002-011-9161-2

Cited by 20 publications

(22 citation statements)

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“…Many researchers extended the above mentioned studies by adding other dimensions such as managerial incentives (Bhardwaj and Balasubramanian, 2005), non-price competition (Zhao et al, 2009;Liu and Tyagi, 2011;Wang et al, 2011;Zhang et al, 2012;Zhou and Cao, 2014), risk aversion (Xiao and Choi, 2009), number of players (Anderson and Bao, 2010), demand uncertainty (Cao et al, 2010). Considering managerial incentives, Bhardwaj and Balasubramanian (2005) demonstrated that an asymmetric channel structure with one integrated manufacturer and the other decentralized manufacturer arises in equilibrium.…”

Section: Literature Reviewmentioning

confidence: 99%

“…We depart from their studies by considering endogenous channel strategies in a mixed duopoly, while they consider channel strategies of private firms. Comparisons between integrated and decentralized channels were conducted by Anderson and Bao (2010), Wang et al (2011) andZhang et al (2012), with focuses on the effect of number of players, persuasive advertising and informative advertising, respectively, but they did not study endogenous channel strategies.…”

Section: Literature Reviewmentioning

confidence: 99%

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Distribution channel strategies in a mixed market

Bian

Guo

2015

International Journal of Production Economics

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a b s t r a c tThis paper studies equilibrium channel strategies in a mixed market with a public firm and a private firm. The public firm is concerned with social welfare, while the private firm aims to maximize its own profit. Each firm decides whether to adopt an integrated or a decentralized channel. We examine two standard market competition modes, Bertrand and Cournot. Within each competition mode, we consider two typical vertical contracts, wholesale-price and two-part tariff contracts. Our results suggest that equilibrium channel structures depend on the market competition mode, the vertical contract form, and the level of product substitutability. Specifically, the channel strategy of the private firm depends mainly on the vertical contract form: under a two-part tariff contract, the private firm always chooses decentralization; under a wholesale-price contract, the private firm chooses integration for most scenarios except for highly substitutable products under Bertrand competition (i.e., under very intense competition). The channel strategy of the public firm depends mainly on the competition mode: under Bertrand competition, the public firm always chooses decentralization; under Cournot competition, the public firm always chooses the opposite of the private firm's strategy.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Distribution channel strategies in a mixed market

Bian

Guo

2015

International Journal of Production Economics

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“…Zhang et al. () obtained opposite findings with informative advertising, that is, decentralization improves channel profits when products are highly substitutable. Studying the profitability of cooperative advertising in the same channel structure, Karray et al.…”

Section: Introductionmentioning

confidence: 98%

“…() and Zhang et al. (), which investigated whether decentralized channels could still perform better than integrated channels when competition between channels goes beyond prices to also include advertising. Wang et al.…”

Section: Introductionmentioning

confidence: 99%

Manufacturer defensive and offensive advertising in competing distribution channels

Martín‐Herrán

Sigué

2019

Int Trans Operational Res

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This paper investigates how two competing manufacturers should invest in defensive and offensive advertising in a two‐segment market and whether they should each adopt a decentralized or an integrated channel if their goal is to maximize total channel profits. We find that manufacturers in decentralized channels can exclusively undertake either of the two types of advertising or combine the two at the equilibrium. In integrated channels, they can either combine the two or exclusively undertake defensive advertising. When multiple equilibria exist, strategies that combine both types of advertising should be preferred to exclusive defensive advertising strategies, which are better than exclusive offensive advertising strategies. Also, total channel profits are higher in decentralized channels than in integrated channels when the brands are moderately or highly substitutable. Conversely, total channel profits of integrated channels are higher than those of decentralized channels in areas where the brands are relatively differentiated and the offensive advertising retaliatory capacity of the rival is stronger. Theoretical and managerial implications of these findings are discussed.

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“…Leur meilleure connaissance (brand awareness) conduit potentiellement à accroitre leur espace de consommation (voir Doraszelski et Markovich, 2007;Ali Shah et Akbar, 2008;Clark et al, 2009). La publicité informative est de plus utile, comme moyen d'information, au fonctionnement du jeu concurrentiel Zhang et al, 2012) : elle permet la pénétration de nouveaux produits et favorise les néoconcur-rents (Kessides, 1986). Elle modifie, selon Ehrlich et Fisher (1982), les opportunités d'achat des consommateurs et réduit « l'inertie et l'ignorance » de ces derniers.…”

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Information versus persuasion : la controverse autour de l’impact de la publicité sur les préférences des consommateurs

Lanotte

Rossi

2014

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Résumé de l'articleLa publicité reste un sujet majeur de discussion en économie, notamment du fait de son influence sur le comportement du consommateur et de son incidence sur la fonction de demande. Alors qu'une partie des économistes envisage la publicité sous un angle informatif, d'autres insistent davantage sur sa dimension persuasive. Cette opposition originelle fonde l'approche économique de la publicité sur un clivage dialectique fécond mais elle induit un biais normatif en matière de régulation. Cette dialectisation originelle du débat théorique illustre la difficulté des économistes à comprendre : 1) la relation entre la publicité et l'évolution des préférences des consommateurs; 2) la fonction qui lui est reliée. Nous nous proposons d'analyser ce diptyque fondateur en questionnant sa portée et ses limites. Résumé -La publicité reste un sujet majeur de discussion en économie, notamment du fait de son influence sur le comportement du consommateur et de son incidence sur la fonction de demande. Alors qu'une partie des économistes envisage la publicité sous un angle informatif, d'autres insistent davantage sur sa dimension persuasive. Cette opposition originelle fonde l'approche économique de la publicité sur un clivage dialectique fécond mais elle induit un biais normatif en matière de régulation. Cette dialectisation originelle du débat théorique illustre la difficulté des économistes à comprendre : 1) la relation entre la publicité et l'évolution des préférences des consommateurs; 2) la fonction qui lui est reliée. Nous nous proposons d'analyser ce diptyque fondateur en questionnant sa portée et ses limites.abstract -Advertising remains a major topic in economics, particularly because of its impact on consumers' behavior and its impact on the demand function. While some economists consider advertising from an informative side, others focus more on its persuasive side. In this study, we affirm that this original opposition has based the economic approach to advertising on a fruitful dialectic cleavage inducing a normative bias on regulation. This original opposition mainly reveals the difficulty some economists have to clarify: 1) the relationship between advertising and the evolution of consumers' preferences; 2) the function to which advertising is related to. We propose to analyze the scope and limitations of this seminal dialectical cleavage.

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Competitive effects of informative advertising in distribution channels

Cited by 20 publications

References 30 publications

Distribution channel strategies in a mixed market

Distribution channel strategies in a mixed market

Manufacturer defensive and offensive advertising in competing distribution channels

Information versus persuasion : la controverse autour de l’impact de la publicité sur les préférences des consommateurs

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