How does the added new online channel impact the supporting advertising expenditure?

Pei, Zhi; Toombs, Leslie A.; Yan, Ruiliang

doi:10.1016/j.jretconser.2014.02.004

Cited by 22 publications

(11 citation statements)

References 20 publications

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“…The literature that investigates cooperative advertising and pricing in a dual-channel supply chain environment contains the studies by Cao et al [10], Chen [16], Pei et al [37], Yan and Pei [44], and Yan et al [45]. Cao et al [10] focus on advertising decisions under centralized and decentralized channels in the presence of customer returns.…”

Section: Literature Reviewmentioning

confidence: 99%

“…For example, in a practice called "cooperative advertising", the manufacturer shares the cost of the retailer's local advertising efforts in an attempt to stimulate demand and increase product sales. Companies such as Apple, Dell, and HP offer these programs [37]. Implementing a cooperative advertising scheme in a dual-channel environment may result in interesting dynamics because the firms in the channel compete (horizontally and vertically) and cooperate at the same time.…”

Section: Introductionmentioning

confidence: 99%

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Effects of consumer loyalty and product web compatibility on cooperative advertising and pricing policies in a dual-channel supply chain

Chaab

Demirag

2022

RAIRO-Oper. Res.

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A common practice for brand manufacturers is to operate dual distribution channels in which they offer an online channel for direct sales to end consumers and an independently-managed retail channel for sales in physical stores. This structure enables the manufacturers to reach multiple segments of consumers with different online and offline shopping preferences, but it may create channel conflicts due to the manufacturers' competitive position in the end market. Cooperative advertising programs can be implemented in response to the emerging competitive dynamics between the manufacturers and the retailers. We investigate the impact of the consumers' sales channel preference (i.e., "consumer loyalty") and the product compatibility with online shopping (i.e., "product web compatibility/fit") on the cooperative advertising and pricing decisions of a manufacturer and a retailer in a dual-channel supply chain. We use game-theoretical models and characterize the firms' equilibrium behaviors under different power structures in the channel. Our results indicate that the level of the retailer's advertising investment and the manufacturer's reimbursement in the cooperative advertising program depend critically on consumer loyalty, product web compatibility, and the power distribution among the channel members. For example, when the channel power is symmetrically distributed or held asymmetrically by the retailer, the retailer's local advertising level increases as the product web compatibility decreases or the proportion of store-loyal consumers increases; whereas this trend is reversed when the manufacturer is the channel leader. We examine how the introduction of the direct channel affects the profits, and we generate additional managerial insights from numerical experiments.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Effects of consumer loyalty and product web compatibility on cooperative advertising and pricing policies in a dual-channel supply chain

Chaab

Demirag

2022

RAIRO-Oper. Res.

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“…As shown in Figure 1, after placing an order online, if a consumer chooses to (i), she knows the exact value of the product only after receiving it. If the actual value does not meet her expectation, she can return the product with a full refund [26], but she needs to pay the return shipping fee for each unit of the product [27]. Suppose the forward shipping fee is paid by the retailer while the return shipping fee is paid by the consumer and the express company charges the same shipping fee m for both of them.…”

Section: Modeling the Omnichannel Under Reference Price Effectsmentioning

confidence: 99%

Multiperiod Dynamic Pricing and Inventory Control Decisions for an Omnichannel BOPS Retailer with Reference Price Effects

2021

Mathematical Problems in Engineering

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This paper utilizes the consumers’ reference price in prospect theory to analyze an omnichannel retailer’s multiperiod pricing and inventory management problem in which consumers can cancel their orders before payment and return the products after payment if the products do not meet their expectation. The omnichannel retailer’s optimal equilibrium pricing and ending inventory level are derived under reference price effects by maximizing the discounted total profit over the infinite planning horizon, where the optimal decisions we discussed under two scenarios: loss neutrality and loss aversion. The analysis shows that the convergence of the pricing and ending inventory level toward their equilibrium is from above or below, depending on the relative location of the initial reference price with respect to the unique equilibrium price. Moreover, a set of sensitivity analyses is discussed to characterize the impacts of system parameters on the optimal decisions. This research fills the gap of behavioral operation in the field of omnichannel joint pricing and inventory management.

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“…Moreover, product information from an online channel can improve the performance of retail operations [7,8]. Over the past two decades, a large number of researchers have focused on exploring the characteristics of supply chain(SC) decisions in the presence of an online channels from various perspectives, such as consistent or inconsistent pricing decision in both retail and online channels [5,[9][10][11], product quality decision [12], the effect of free-riding [13], assortment decision [14], retailer's service effort [15], cooperative advertising decision [16,17], inventory decision [18], carbon emission reduction decision [19], the effect of disruption [20], information asymmetry [21,22], green-product retailing [23], re-manufacturing decision [24] etc. However, the characteristics of the manufacturer's decision to open an online channel and strategic integration decisions under competition are not well documented in the literature.…”

Section: Introductionmentioning

confidence: 99%

Strategic Integration Decision under Supply Chain Competition in the Presence of Online Channel

Saha

Nielsen

2020

Symmetry

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This study explores the pricing decisions of substitutable products for two competing supply chains in the presence of an online channel. Each supply chain consisting of a single manufacturer and an exclusive retailer and one of the manufacturers distributes products through the online channel. We examine optimal decisions under five scenarios to explore how the strategic cooperation between two manufacturers at the upstream horizontal level or with the retailer at the vertical level affects product pricing decisions and the performance of two supply chains? The results reveal that decisions for cooperation with competing manufacturers and opening an online channel are correlated. In the absence of an online channel, cooperation with their respective retailer can lead to a higher supply chain profit. However, if a manufacturer opens an online channel, then cooperation with competing manufacturers can lead to a higher supply chain profit. Under the vertical integration, total supply chain profit might be lower compared to a scenario where members in each supply chain remain independent. Consumers also need to pay more for products.

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How does the added new online channel impact the supporting advertising expenditure?

Cited by 22 publications

References 20 publications

Effects of consumer loyalty and product web compatibility on cooperative advertising and pricing policies in a dual-channel supply chain

Effects of consumer loyalty and product web compatibility on cooperative advertising and pricing policies in a dual-channel supply chain

Multiperiod Dynamic Pricing and Inventory Control Decisions for an Omnichannel BOPS Retailer with Reference Price Effects

Strategic Integration Decision under Supply Chain Competition in the Presence of Online Channel

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