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Cooperative advertising and pricing models in a dynamic marketing channel

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Abstract

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.

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Authors and Affiliations

  1. School of Economics and Management, Tongji University, Shanghai, 200092, China

    Mingyang Zhou & Jie Lin

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  1. Mingyang Zhou
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  2. Jie Lin
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Correspondence to Jie Lin.

Additional information

This paper was supported by National Natural Science Foundation of China (No.71101107), National Science and Technology Support Program (No.2011BAC10B08), Shanghai Leading Academic Discipline Project (No.B310) and the Program of Humanities and Social Sciences of Education Ministry (No.11YJC630216).

Mingyang Zhou is a PhD candidate at the School of Economics and Management, Tongji University, Shanghai, China. He earned his M.S. degree in School of Information Science & Technology at Donghua University. His current research interests lie in the field of supply chain management and marketing.

Jie Lin is a professor at the School of Economics and Management, Tongji University, Shanghai, China. He received his Ph.D in School of Management at Southwest Jiaotong University, R.P. China. His current research interests lie in the field of supply chain management, multi-agent supply chain simulation, business intelligence. He has published in several journals, including International Journal of Advanced Manufacturing Technology, International Journal of Production Research, Expert Systems with Applications, Simulation Modelling Practice and Theory, etc.

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Zhou, M., Lin, J. Cooperative advertising and pricing models in a dynamic marketing channel. J. Syst. Sci. Syst. Eng. 23, 94–110 (2014). https://doi.org/10.1007/s11518-013-5221-x

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  • DOI: https://doi.org/10.1007/s11518-013-5221-x

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