RT info:eu-repo/semantics/article
T1 Assessing the Profitability of Cooperative Advertising Programs in Competing Channels
A1 Karray, Salma
A1 Martín Herrán, Guiomar
A1 Zaccour, Georges
AB A large literature studied the profitability (effectiveness) of cooperative advertising programs(CAPs) in distribution channels, but very few studies modeled pricing decisions incompetitive markets under different channel structures. This paper fills this gap. We proposea game-theoretic model where two competing channels make pricing and promotionaldecisions. The efectiveness of CAPs is studied under different channel structures to examinehow vertical and horizontal externalities can impact the effectiveness of CAPs. Eachchannel structure can be integrated or decentralized to account for different vertical interactioneffects, resulting in three cases: (i) both channels are decentralized (DD), (ii) bothare integrated (II), and (iii) a hybrid structure where one channel is decentralized and iscompeting with an integrated channel (DI). We solve six non-cooperative games: (1) bothmanufacturers offer CAPs under DD, (2) only one manufacturer offers a CAP under DD,(3) both manufacturers do not offer CAPs under DD, (4) the decentralized manufactureroffers a CAP under DI, (5) the decentralized manufacturer does not offer a CAP underDI, and (6) the channel problem under II. Then, we obtain and compare equilibriumprofits and strategies across these games. The main results indicate that the profitabilityof CAPs depends on the levels of price competition and of the advertising effects. Also,while manufacturers benefit from CAPs, retailers may not find such programs profitable.Finally, the decentralized or integrated structure of the competing channel significantly impactsthe effects of cooperative advertising. For example, CAPs can effectively coordinatethe DD channel and even help it exceed profits earned by a vertically integrated channel.However, in the DI case, although CAPs can improve total channel profits, they do notfully coordinate the channel.
YR 2017
FD 2017
LK http://uvadoc.uva.es/handle/10324/27735
UL http://uvadoc.uva.es/handle/10324/27735
LA eng
NO International Journal of Production Economics 187, 142-158, 2017.
NO Producción Científica
DS UVaDOC
RD 23-nov-2024