Research On Cooperative Advertising In Supply Chain Considering Retailer's Fairness Preference

With the coming of information age,advertising as a marketing strategy is widely used in all kinds of enterprises.In the meantime,with the enhancement of cooperation between supply chain's upstream and downstream enterprises,cooperative advertising is paid more attention which is one kind of marketing strategies to improve performance of the supply chain.While the previous literature is mainly based on the supply chain members is fully rational to analysis problem,in reality,members tend to be fair c oncern.This article considers the condition that the supply chain is composed by one manufacturer and one retailer.We set up Nash game model and Stackelberg game model dominated by the manufacturer correspond the situation of whether the manufacturer takes cooperative advertising strategy when the retailer is fair ly neutral,and set up Nash game model and Stackelberg game model dominated by the manufacturer correspond the situation of whether the manufacturer takes cooperative advertising strategy when the retailer is fairness concern.And through theoretical analysis and numerical simulation,this article discusses the influence of retailer's fairness preference to the decision of cooperative advertising in the supply chain.Comparing the situation in which retailer is fairly neutral and fair concern,this paper found that the supply chain members' optimal decisions rely on the coefficient fairness concern absolutely when the retailer is fair concern.Whether the retailer has fairness preference or not,supply chain members' optimal dec isions also rely on each other's advertising efficiency when the manufacturer takes cooperative advertising strategy,compared with manufacturer does not take cooperative advertising strategy;the manufacturer can always make more profits when he takes cooperative advertising strategy comparing when he doesn't take cooperative advertising strategy.While the retailer is not that,he doesn't always make more profits than situation that the manufacturer takes cooperative advertising strategy;so the cooperative advertising strategy that the manufacturer takes as a way to give subsidy for retailer's local advertisement is more favorable to the leader of the supply chain,namely the manufacturer;and the retailer should adopt appropriate strategies to avoid the loss of his own profits.In terms of whether the manufacturer takes cooperative advertising strategy or not,this paper found that the effect of retailer's fairness concern degree has difference on the optimal decision of chain members.Only the manufacturer's national advertising reduce with the increase of retailer's fairness concern degree,and lower than the situation of fairly neutral,regardless of the manufacturer takes cooperative advertising strategy or not.When the manufacturer doesn't take cooperative advertising strategy,the optimal wholesale price of manufacturers and retailer's optimal retail price along with the retailer's fairness concern degree,and the retailer's optimal local advertising reduce with the increase of retailer's fairness concern degree,which is opposite with the condition of the manufacturer takes cooperative advertising strategy;the profit of the manufacturer and the system of supply chain decrease with the increase of retailer's fairness concern degree,and lower than the condition of retailer is fairly neutral and centralized decision-making situation.Obviously the act of retailer's not being completely rational ‘fairness concern',will generates adverse effect to manufacturer's and supply chain system's profit,lead to lower supply chain performance.At the same time what we need point is when the manufacturer takes cooperative advertising strategy,at first the retailer's profit rise with the increase of retailer's fairness concern degree while decrease with the increase of retailer's fairness concern;when it satisfies certain condition,the retailer's profit is higher than that of retailer is fairly neutral.Consequently,for the retailer,when manufacturer takes cooperative advertising strategy,he can make certain price and put certain amount of advertising to get profit more than the situation which he is fairly neutral.