Effects of consumer loyalty and product web compatibility on cooperative advertising and pricing policies in a dual-channel supply chain

A common practice for brand manufacturers is to operate dual distribution channels in which they offer an online channel direct sales end consumers and independently-managed retail physical stores. This structure enables the reach multiple segments of with different offline shopping preferences, but it may create conflicts due manufacturers’ competitive position market. Cooperative advertising programs can be implemented response emerging dynamics between retailers. We investigate impact consumers’ preference ( i.e ., “consumer loyalty”) product compatibility “product web or fit”) on cooperative pricing decisions a manufacturer retailer dual-channel supply chain. use game-theoretical models characterize firms’ equilibrium behaviors under power structures channel. Our results indicate that level retailer’s investment manufacturer’s reimbursement program depend critically consumer loyalty, compatibility, among members. For example, when symmetrically distributed held asymmetrically by retailer, local increases as decreases proportion store-loyal increases; whereas this trend reversed leader. examine how introduction affects profits, we generate additional managerial insights from numerical experiments.