Title: Cooperative advertising in a dual channel supply chain

Authors: Ruiliang Yan, Sanjoy Ghose, Amit Bhatnagar

Addresses: School of Business Administration, University of Wisconsin-Milwaukee, P.O. Box 742, Milwaukee WI 53201, USA. ' School of Business Administration, University of School of Business Administration, University of Wisconsin-Milwaukee, P.O. Box 742, Milwaukee WI 53201, USA. ' School of Business Administration, University of Wisconsin-Milwaukee, P.O. Box 742, Milwaukee WI 53201, USA

Abstract: The focus of this study is cooperative (co-op) advertising and the impact it has on the dual channel supply chain. We obtain equilibrium pricing and co-op advertising policies under two different competitive scenarios: Bertrand and Stackelberg equilibrium. We also compare the profit gains under these two marketing games. Based on our results, we propose the optimal strategies that system members should adopt in a dual channel competition. We also illustrate that by strategically implementing a cooperative advertising strategy under different market structures, both the system players can effectively improve their overall profits in a dual channel supply chain management.

Keywords: direct marketing; retail marketing; cooperative advertising; distribution channels; Bertrand and Stackelberg competition; supply chain management; SCM; electronic marketing; electronic advertising; dual channel supply chains; internet advertising; online marketing; e-marketing; e-advertising; online advertising; internet marketing.

DOI: 10.1504/IJEMR.2006.011028

International Journal of Electronic Marketing and Retailing, 2006 Vol.1 No.2, pp.99 - 114

Published online: 04 Oct 2006 *

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