Cross-brand and cross-channel advertising strategies in a dual-channel supply chain

¹ School of Politics & Public Administration, Soochow University, Suzhou 215123, P.R. China
² School of Economics and Business Administration, Central China Normal University, Wuhan, P.R. China
³ School of Business Administration, Guangdong University Of Finance & Economics, Guangzhou 510320, P.R. China

^* Corresponding author: xphong@mail.hzau.edu.cn, hskming@163.com

Received: 8 February 2018
Accepted: 12 October 2018

Abstract

The economic value of private brands and online marketing channel have been widely recognized in literature and practical life. Besides, studies show that advertising, as one of the major factors, can affect consumer attitudes and has significant effects on demand and profit. On the existing basis, this paper analyzes the advertising strategies under competition between a national brand manufacturer and a retailer with private brand, where the national brand can be sold both through a direct channel and a store channel but the retailer brand can be sold only through a store channel. We study the best advertising investment strategies and the balanced profits of the national brand manufacturer and retailer in the disintegrated system and the integrated system. Specially, in the disintegrated system, we discuss the best decision-making issues for national brand manufacturer and retailer in two special cases which there is only have brand competition or channel spillover effects. We discuss the impacts of the spillover effect and brand competition on the chain members and advertising strategies of different channels. In addition, we design a unilateral advertising subsidy contract to coordinate the supply chain. The results in this paper offer structural and quantitative insights into the interplay between the manufacturer and retailer in the dual channel supply chain and can be used as a reference for choosing the optimal advertising strategy.