Advertising strategies in one manufacturer and two competitive retailers supply chain

• Main Authors: Cheng-kang Liu, 劉誠剛
• Other Authors: Fu-shiang Tseng
• Format: Others
• Language: en_US
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/76656637791979715896

碩士 === 國立中央大學 === 工業管理研究所 === 98 === Abstract In this study, we discuss the pricing decisions and two–tier advertising strategies between one manufacturer and two competitive retailers in a supply chain. We assume the manufacturer produces one product and sells the goods through two competitive retailers. The manufacturer use brand advertising to increase customer’s interest and to increase the overall demand as the result. Retailers also utilize local advertising campaign to attract customers. Customer’s demand depends on the retail prices and advertisements by the manufacturer and two retailers. Two retailers compete with each other by pricing strategies and advertising strategies to maximize their individuals’ profits. We propose a duopoly model and use Nash equilibrium to elaborate two competitive retailers’ competition process. We assume the manufacturer has bargain power in the supply chain, and two retailers make their decisions based on manufacturer’s wholesale price and brand advertising. In other words, retailers’ optimal decisions follow the manufacturer’s decision on wholesale price and brand advertising. The manufacturer expects retailers’ competition results to make his best decisions. We construct a Stackelberg model in which the manufacturer is a leader and two retailers are followers, and analyze three way optimal pricing strategies and advertising strategies. Furthermore, we study the sensitive analysis on the parameters.