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Manufacturer's cooperative advertising, demand uncertainty, and information sharing

Author

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  • Yan, Ruiliang
  • Cao, Zixia
  • Pei, Zhi

Abstract

We assume a manufacturer–retailer supply chain where the manufacturer opens an online channel and provides a monetary support to the retailer to implement a local advertising campaign. Both the manufacturer and the retailer have their own information about the state of market demand. We thus examine the value of manufacturer's cooperative advertising and its strategic influence on information sharing of the manufacturer and the retailer. Our results show that the manufacturer's cooperative advertising coordinates the dual-channel distributions effectively and helps improve the channel performance under the environment of demand uncertainty. However, the manufacturer's cooperative advertising also stimulates the retailer to distort its information while the manufacturer has a motivation to understate its forecast. Hence, an advertising agency should be employed to verify the shared information and help make an optimal investment in advertising, so that information distortion can be eliminated and optimum results can be achieved.

Suggested Citation

  • Yan, Ruiliang & Cao, Zixia & Pei, Zhi, 2016. "Manufacturer's cooperative advertising, demand uncertainty, and information sharing," Journal of Business Research, Elsevier, vol. 69(2), pages 709-717.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:2:p:709-717
    DOI: 10.1016/j.jbusres.2015.08.011
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    References listed on IDEAS

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    Cited by:

    1. Li, Hai & Leng, Kaijun & Qing, Qiankai & Zhu, Stuart X., 2018. "Strategic interplay between store brand introduction and online direct channel introduction," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 272-290.
    2. Martín-Herrán, Guiomar & Sigué, Simon P., 2017. "An integrative framework of cooperative advertising: Should manufacturers continuously support retailer advertising?," Journal of Business Research, Elsevier, vol. 70(C), pages 67-73.
    3. Gou, Qinglong & Shao, Jing & Wang, Xin & Yu, Lili, 2020. "Co-op supply chains with a local media company: Models and analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    4. Yan, Ruiliang & Pei, Zhi, 2019. "Return policies and O2O coordination in the e-tailing age," Journal of Retailing and Consumer Services, Elsevier, vol. 50(C), pages 314-321.
    5. Lu, Fuxiao & Tang, Wansheng & Liu, Guowei & Zhang, Jianxiong, 2019. "Cooperative advertising: A way escaping from the prisoner’s dilemma in a supply chain with sticky price," Omega, Elsevier, vol. 86(C), pages 87-106.
    6. Yan, Ruiliang & Pei, Zhi & Myers, Chris, 2016. "Do channel members value the multiple-cooperation strategy?," Journal of Retailing and Consumer Services, Elsevier, vol. 30(C), pages 84-95.
    7. Yan, Ruiliang & Cao, Zixia, 2017. "Is brand alliance always beneficial to firms?," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 193-200.
    8. Huang, Song & Zhang, Xianmei & Chen, Shuting, 2021. "Information acquisition with advertising threshold effect under manufacturer encroachment in a supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 153(C).
    9. He, Yi & Wang, Hang & Guo, Qiang & Xu, Qingyun, 2019. "Coordination through cooperative advertising in a two-period consumer electronics supply chain," Journal of Retailing and Consumer Services, Elsevier, vol. 50(C), pages 179-188.
    10. Cao, Zixia & Yan, Ruiliang, 2021. "Product nutrition, innovation, advertising, and firm’s financial gains," Journal of Business Research, Elsevier, vol. 133(C), pages 13-22.
    11. T. M. Rofin & Biswajit Mahanty, 2018. "Optimal dual-channel supply chain configuration for product categories with different customer preference of online channel," Electronic Commerce Research, Springer, vol. 18(3), pages 507-536, September.
    12. Guilan Yan & Yi He, 2020. "Coordinating pricing and advertising in a two-period fashion supply chain," 4OR, Springer, vol. 18(4), pages 419-438, December.
    13. Hou, Pengwen & Wang, Jun & Zhang, Qian & Zhang, Shuhua, 2023. "Implications of risk aversion behavior on the green product promotion strategy under manufacturer encroachment," Applied Mathematics and Computation, Elsevier, vol. 447(C).
    14. Li, Bo & Jiang, Yushan, 2019. "Impacts of returns policy under supplier encroachment with risk-averse retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 47(C), pages 104-115.
    15. Yan, Ruiliang & Pei, Zhi & Ghose, Sanjoy, 2019. "Reward points, profit sharing, and valuable coordination mechanism in the O2O era," International Journal of Production Economics, Elsevier, vol. 215(C), pages 34-47.

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