Pricing and cooperative advertising decision models in dual-channel supply chain

To study the influence of cooperative advertising strategy on channel supply chain pricing decision,the two-echelon supply chain system composed of one manufacturer and one retailer was considered.The manufacturer sold the products to end customers both through the direct channel and the traditional retail channel.The demands in two channels were influenced by both prices and advertising investment level.The pricing strategy and cooperative advertising decisions in a centralized dual-channel supply chain and in a decentralized dual-channel supply chain based on Stackelberg game were analyzed.The two-stage optimization technique was utilized to obtain the optimal pricing decisions and advertising investment level.The numerical studies revealed that the manufacturers and the retailers pricing decisions were largely influenced by advertising investment.Customers preferences for the retail channel and the cooperative advertising ratio were closely related to both the optimal pricing decisions and the optimal advertising investment.