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Advertising strategy and contract coordination for a supply chain system: immediate and delayed effects

Hui Yu (Harbin University of Science and Technology, Harbin, China)
Wei Yang (Harbin University of Science and Technology, Harbin, China)
Na Xu (Shandong Technology and Business University, Yantai, China)
Yang Du (Harbin University of Science and Technology, Harbin, China)

Kybernetes

ISSN: 0368-492X

Article publication date: 14 October 2021

Issue publication date: 17 January 2023

132

Abstract

Purpose

After receiving advertising messages, most consumers rarely purchase the advertised products at once, which results in a delay between advertising exposure and its effect. This paper is devoted to exploring the advertising decision and coordination issues for a supply chain system subject to advertising immediate and delayed effects.

Design/methodology/approach

By applying the game theory, the differential game models with delay are constructed for the supply chain to examine the equilibrium advertising efforts, brand goodwill and the optimal profits under the different cooperation situations. A class of transfer payment contracts is designed to achieve the best outcome of the supply chain. Illustrative examples are given to demonstrate the effectiveness of addressed results and provide some managerial perspectives.

Findings

It can be found that the complete cooperation situation can stimulate the advertising investment, drive the product demand and improve the economic profit. Also, a class of transfer payment contracts is designed in this paper, such that the supply chain can perfectly realize the profit maximization, and each member can achieve the Pareto improvement.

Research limitations/implications

This work does not address the random market environment, which can be filled in the future. Furthermore, this paper has been done in a single supply chain structure. It is an interesting future line of research when taking competitive behavior (e.g. competition among manufacturers, retailers or supply chains) into account.

Practical implications

This study will help managers make advertising strategies, advise an optimal cooperation way and design the coordination contracts to ensure the economic development of the supply chain. These obtained conclusions may provide a valuable decision-support for marketing management.

Originality/value

For a supply chain, the most previous literature about dynamic advertising models focused on a single advertising effect-immediate effect. This work explores advertising strategy with double advertising effects and investigates the coordinating power of new transfer payment contracts.

Keywords

Acknowledgements

This work was supported in part by the National Natural Science Foundation of China (No. 72001059 and 12071102) and in part by the University Nursing Program for Young Scholars with Creative Talents in Heilongjiang Province of China under Grant UNPYSCT-2020186, in part by the Natural Science Foundation of Shandong Province of China under Grant ZR201911170322, in part by the Outstanding Youth Science Foundation of Heilongjiang Province of China under Grant YQ2020A004. The authors claim that none of the material in the paper has been published or is under consideration for publication elsewhere.

Citation

Yu, H., Yang, W., Xu, N. and Du, Y. (2023), "Advertising strategy and contract coordination for a supply chain system: immediate and delayed effects", Kybernetes, Vol. 52 No. 1, pp. 235-261. https://doi.org/10.1108/K-03-2021-0185

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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