The Research Of Goodwill Effect On Price And Advertisement In Marketing Channel

The object of this article is a simple channel consisted of a manufacturer and a retailer. In order to achieve the maximum corporate profits, manufacturers and retailers need to advertise the product. Using Stackelberg differential game model to study goodwill effect on price and advertisement in marketing channel. This article discuss the situation when the manufacturer supports and disapprove the retailer advertising where the market dominated by manufacturers or retailers.These cases are as follows:manufacturers dominate the market but the manufacturer do not support retailers advertising; retailers dominate the market but the manufacturer do not support the retailer advertising; manufacturers dominate the market and the manufacturer support retailers advertising; retailers dominate the market and the manufacturer support retailers advertising; The author research the relationship between goodwill and price or advertisement, in order to guide the manufacturers and retailers making specific marketing decisions. The results showed that:It is similar that the relationship between goodwill and manufacturers’advertising investment or price in the four cases, the tiny difference is that the ratio isn’t equal; For retailers,there are some distinscts in the four cases. Goodwill hasn’t relationship with retailers’advertising investment when manufacturers dominate the market but the manufacturer do not support retailers advertise and retailers dominate the market but the manufacturer do not support the retailer advertise and retailers dominate the market and the manufacturer support retailers advertising, but the size of retailers advertising has a positive correlation with the retailer’s profit margins, the relationship is linear between goodwill and retailers advertising, when manufacturers dominate the market and the manufacturer support retailers advertising.The innovations of this paper are follows: ①This article focus on studying how the product’s goodwill affect manufacturers’and retailers’ advertising investment and the price. Usually, Scholars’ assume the manufacturer’s and the retailer’s advertising campaign will increase product. but this article mainly research whether the relationship between goodwill and manufacturers or retailers advertising investment, price is linear or not? If the relationship is linear correlation, the correlation is positive or negative?②This article firstly contacts the impact coefficient that the goodwill affect manufacturer’s and retailer’s advertising input or price with the product life cycle (take high-tech products for example).This paper not only improve the analysis theoretically, but the conclusion it obtained is much more practical. The conclusion imply that whether the manufacturer support the retailers or not, the market is led by the manufacturer or the retailers, the relationship between goodwill and manufacturers’ advertising investment and the price stay the same way. as to the retailers, they should determine the advertising costs according to the actual situation.