Solving a Two-Period Cooperative Advertising Problem Using Dynamic Programming

Document Type: Research Paper

Authors

1 Department of Industrial Engineering, Khatam University, Tehran, Iran

2 School of Industrial Engineering, College of Engineering, University of Tehran, Tehran, Iran

Abstract

Cooperative advertising is a cost-sharing mechanism in which a part of retailers' advertising investments are financed by the manufacturers. In recent years, investment among advertising options has become a difficult marketing issue. In this paper, the cooperative advertising problem with advertising options is investigated in a two-period horizon in which the market share in the second period depends on the decisions made in the first period. The problem is solved for two cases of the absence and presence of cooperative advertising contract, and the results are compared. The solution to the problem is presented using the concepts of the Nash equilibrium, Stackelberg game, stochastic games, and dynamic programming. The computational results using numerical examples show that if the cooperative advertising contract is offered in the win-win condition, the players’ profit will increase significantly.

Keywords

Main Subjects


Article Title [فارسی]

حل مسئله تبلیغات مشارکتی دو دوره‏ای با برنامه‏ریزی پویا

Authors [فارسی]

  • سعید علائی 1
  • ندا معنوی زاده 1
  • مسعود ربانی 2
1 گروه مهندسی صنایع، دانشکدة فنی و مهندسی، دانشگاه خاتم، تهران، ایران
2 دانشکده مهندسی صنایع، پردیس دانشکده های فنی، دانشگاه تهران، تهران، ایران
Abstract [فارسی]

تبلیغات مشارکتی یک استراتژی بازاریابی است که در آن بخشی از سرمایه گذاری تبلیغاتی خرده فروش ها توسط تولیدکننده ها تامین می شود. در سال های اخیر، سرمایه گذاری میان گزینه های تبلیغاتی نیز به یک موضوع بازاریابی پیچیده ای تبدیل شده است. در این مقاله، مسئله تبلیغات مشارکتی با گزینه های تبلیغاتی در حالت دو دوره ای بررسی شده است که در آن سهم بازار در دوره دوم به تصمیمات دوره اول وابسته است. مسئله در دو حالت وجود و عدم وجود قرارداد تبلیغات مشارکتی حل شده و مقایسه شده است. تحلیل مدل با استفاده از مفاهیم تعادل نش، بازی استکلبرگ، بازی های تصادفی و برنامه ریزی پویا انجام شده است. نتایج محاسباتی حاصل از مثال های عددی نشان می دهد که در صورتی که قرارداد تبلیغات مشارکتی در ناحیه برنده-برنده پیشنهاد شود، سود بازیکنان بطور قابل توجهی افزایش پیدا می کند.

Keywords [فارسی]

  • تبلیغات مشارکتی
  • تئوری بازی ها
  • بازی های تصادفی
  • گزینه های تبلیغاتی
Alaei, S., Alaei, R., & Salimi, P. (2014). A game theoretical study of cooperative advertising in a single-Manufacturer-two-retailers supply chain. The International Journal of Advanced Manufacturing Technology, 74(1-4), 101-111. Alaei, S., & Setak, M. (2016). Supply chain coordination via two-way cooperative advertising contract considering competing retailers. Scientia Iranica, 23(5), 2330-2340. Aust, G., & Buscher, U. (2014a). Cooperative advertising models in supply chain management: A review. European Journal of Operational Research, 234(1), 1-14. Aust, G., & Buscher, U. (2014b). Vertical cooperative advertising in a retailer duopoly. Computers & Industrial Engineering, 72, 247-254. Bergen, M., & John, G. (1997). Understanding cooperative advertising participation rates in conventional channels. Journal of Marketing Research, 34(3), 357-369. Berger, P. D. (1972). Vertical cooperative advertising ventures. Journal of Marketing Research, 9(3), 309-312. Brennan, L. (1988). How retailers are putting it all together. Sales and Marketing Management, 5, 62-65. Chen, T. H. (2011). Coordinating the ordering and advertising policies for a single-period commodity in a two-level supply chain. Computers & Industrial Engineering, 61(4), 1268-1274. Chutani, A., & Sethi, S. P. (2012). Cooperative advertising in a dynamic retail market oligopoly. Dynamic Games and Applications, 2(4), 347-375.
Clark, S. (2000). Dual destiny. Adweek, 41, 60-66. Frison, S., Dekimpe, M. G., Croux, C., & De Maeyer, P. (2014). Billboard and cinema advertising: Missed opportunity or spoiled arms? International Journal of Research in Marketing, 31(4), 425-433. Giri, B. C., & Bardhan, S. (2014). Note on “Coordinating the ordering and advertising policies for a single-period commodity in a two-level supply chain.” Computers & Industrial Engineering, 77, 11-14.
160 (IJMS) Vol. 14, No. 1, Winter 2021
Giri, B. C., & Sharma, S. (2014). Manufacturer's pricing strategy in a two-level supply chain with competing retailers and advertising cost dependent demand. Economic Modelling, 38, 102-111. He, Y., Liu, Z., & Usman, K. (2014). Coordination of cooperative advertising in a two-period fashion and textiles supply chain. Mathematical Problems in Engineering, 2014, 1-10.
He, Y., Wang, H., Guo, Q., & Xu, Q. (2019). Coordination through cooperative advertising in a two-period consumer electronics supply chain. Journal of Retailing and Consumer Services, 50, 179-188. Hong, X., Xu, L., Du, P., & Wang, W. (2015). Joint advertising, pricing and collection decisions in a closed-loop supply chain. International Journal of Production Economics, 167, 12-22. Jørgensen, S., Taboubi, S., & Zaccour, G. (2001). Cooperative advertising in a marketing channel. Journal of Optimization Theory and Applications, 110(1), 145-158. Jørgensen, S., & Zaccour, G. (2003). A differential game of retailer promotions. Automatica, 39(7), 1145-1155. Jørgensen, S., & Zaccour, G. (2014). A survey of game-theoretic models of cooperative advertising. European Journal of Operational Research, 237(1), 1-14. Karray, S., & Hassanzadeh-Amin, S. (2015). Cooperative advertising in a supply chain with retail competition. International Journal of Production Research, 53(1), 88-105. Karray, S., Martín-Herrán, G., & Sigué, S. P. (2017). Cooperative advertising for competing Manufacturers: The impact of long-term promotional effects. International Journal of Production Economics, 184, 21-32. Karray, S., & Zaccour, G. (2007). Effectiveness of coop advertising programs in competitive distribution channels. International Game Theory Review, 9(2), 151–167. Lieb, R. (2012). Co-op advertising: Digital’s lost opportunity? Report, Interactive Advertising Bureau, Local Search Association. Martín-Herrán, G., & Sigué, S. P. (2017). An integrative framework of cooperative advertising: Should manufacturers continuously
Solving a Two-Period Cooperative Advertising Problem Using Dynamic Programming 161
support retailer advertising? Journal of Business research, 70, 67-73. Nash Jr, J. F. (1950). The bargaining problem. Econometrica: Journal of the Econometric Society, 18(2), 155-162. Von Stackelberg, H. (1934). Marktform und gleichgewicht. Springer. SeyedEsfahani, M. M., Biazaran, M., & Gharakhani, M. (2011). A game theoretic approach to coordinate pricing and vertical co-op advertising in Manufacturer–retailer supply chains. European Journal of Operational Research, 211(2), 263-273. Xiao, T., Yan, X., & Zhao, J. (2010). Coordination of a supply chain with advertising investment and allowing the second ordering. Technology and Investment, 1(3), 191-200.
Xu, Q., Xu, B., Bo, Q., & He, Y. (2019). Coordination through cooperative advertising in a two-period supply chain with retail competition. Kybernetes, 48(6), 1175-1194. Yang, J., Xie, J., Deng, X., & Xiong, H. (2013). Cooperative advertising in a distribution channel with fairness concerns. European Journal of Operational Research, 227(2), 401-407. Zhang, H., & Zhong, S. (2011, December). Co-op advertising analysis within a supply chain based on the product life cycle. Seventh International Conference on Computational Intelligence and Security, CIS 2011, Sanya, Hainan, China, December 3-4, 2011 (pp. 1456-1460). Zhao, L., Zhang, J., & Xie, J. (2016). Impact of demand price elasticity on advantages of cooperative advertising in a two-tier supply chain. International Journal of Production Research, 54(9), 2541-2551. Zhou, E., Zhang, J., Gou, Q., & Liang, L. (2015). A two period pricing model for new fashion style launching strategy. International Journal of Production Economics, 160, 144-156.