Strategies Of Cooperative Advertising In Supply Chain With Differential Game

Cooperative advertising that an upstream manufacturer compensates a downstream retailer for advertising the manufacturer's products in supply chain, in order that the manufacturer and the retailer can be win-win. Based on review of current cooperative advertising literature, cooperative advertising is studied in a two-level supply chain consisting of a manufacturer and a retailer considering two aspects that one is the market structure of downstream retailers and the other is the media number of downstream retailers with theory and method of differential game.Chapter 2 reviews the literature of cooperative advertising and dynamic advertising and evaluates research results detailedly. The relation of the literature and this paper is expounded and this paper points out four research problems based on the literature review.Then, cooperative advertising between one manufacturer and one retailer is researched and the stochastic differential game model is developed in chapter 3. The equilibrium national advertising, local advertising, expected goodwill, deviation and probability distribution function are obtained in Stackelberg and cooperative games with Hamilton-Jacobi-Bellman equation. And the equilibrium advertising sharing rate is obtained in Stackelberg game. This chapter compares the results between in Stackelberg game and in cooperative game and finds the optimal advertising of manufacturer and retailer are higher than in Stackelberg game respectively. Furthermore, the optimal profit in cooperative game is higher than in Stackelberg game in certain condition.Chapter 4 examines cooperative advertising when there are two competitive downstream retailers and develops a stochastic differential game model. The results show that the more the intensity of advertising competition between the two downstream retailers, the more the retailers advertise on local advertising in Stackelberg game. Meanwhile, the relationships of the local advertising and the goodwill of the manufacturer between in Stackelberg game and cooperative game rely on intensity of advertising competition between the two downstream retailers. Even if the retailers and the manufacturer advertise, the goodwill would decrease when the decay of goodwill is large in Stackelberg and cooperative games. However, when the decay of goodwill is small, the goodwill of the manufacturer increases when the retailers and the manufacturer advertise. The goodwill wouldn't increase when the goodwill is large enough even if the retailers and the manufacturer take more advertising.Chapter 5 studies the cooperative advertising with competing supply chains with differential game and the differential game model is developed. In asymmetry supply chain, the equilibrium advertising, advertising cost sharing rate and market share of the retailer are obtained in Stackelberg game with Hamilton-Jacobi-Bellman. In symmetry supply chain, this chapter gets the sufficient condition that the manufacturer offers advertising support to the retailer. Furthermore, the retailers could get positive profit for duopoly and triopoly but the retailers may not get positive profit when there are more than three retailers.At last but not the least, chapter 6 examines the cooperative advertising when the retailer advertises in two media with differential game and analyzes the differential game model with Stackelberg and cooperative games. We finds that the retailer should advertise more in the stronger effectiveness of advertising media and advertise more in the less effectiveness of advertising media when the synergy of the two media is high. This chapter compares the results between in Stackelberg game and cooperative game and finds the optimal advertising of the retailer in two media, the equilibrium sale and the supply chain's profit in cooperative game are higher than in Stackelberg game respectively. This chapter also extends the basic model into the model of the retailer advertising on multiple media and finds that the more the number of the advertising media, the advertising level of the retailer, equilibrium sale and the profits of the manufacturer, the retailer and supply chain are all increasing. It should be noted that the number of advertising media would lead to increase the fixed cost of advertising.