Research On Advertising Strategy In A Dual Channel Supply Chain With Fairness Concerns

With fast development of internet and e-commerce,online advertisement and offline promotion play significant roles in leading to consumption.It is an important marketing tool that upstream and downstream firms implement cooperative advertising in channel competition.However,most researches assume that decision maker is perfect rational,rather than considering the effect of fairness concerns.Therefore,this paper concentrates on advertising strategy with retailer fairness concerns in a dual channel supply chain.We study influences of essential factors on advertising strategy and supply chain performance.We would also find the optimal advertisement volume in different scenarios,and design better mechanism to improve advertisement volume and total utility.Firstly,with the hypothesis of perfect rational decision maker,we focus on the optimal advertising strategy in centralized and decentralized supply chains.The result reveals centralized decision has advantages in advertisement volume and supply chain performance.While in decentralized decision,Stackelberg game mode is always a Pareto improvement of Bertrand game mode,and so as cooperative advertising.Nevertheless,cost sharing cannot reach supply chain coordination.Then,we bring fairness concerns into our model.Since the value of information exists,Stackelberg game mode is always a Pareto improvement likewise.At the same time,members with fairness concerns would cooperate when parameters match specific requirements with fewer limitations.Under Stackelberg game,there is chance of utility coordination,but advertisement volume coordination would never happen.Finally,this paper design two kinds of improvement mechanisms named Strategy Alliance and” Cost Sharing + Profit Sharing”.With the methods of formula derivation and numerical study,we prove Strategy Alliance could reach double coordination of advertisement volume and supply chain utility under certain constraints.Meanwhile,” Cost sharing + Profit sharing” could also reach advertisement volume coordination,but the utility is always less than centralized decision.