Title: Bilateral Participation: A Coordinating Mechanism for Cooperative Advertising in a Distribution Channel with Multiple Retailers
Speaker: Pro. Bintong Chen , Business Administration at University of Delaware.
Time: 2:00 -- 3:00 pm. 20th Jun
Location: Room 217, Guanghua New Building
Abstract：
Consider a distribution channel for a single product with a manufacturer and multiple retailers. Extant literature of cooperative (co-op) advertising mainly focuses on the unilateral participation scheme, in which the manufacturer shares a portion of each retailerrsquos local advertising cost. We show in this paper that the unilateral participation scheme is in general not able to coordinate the channel, and furthermore, the channel efficiency deteriorates as the number of retailer increases. To improve the channel efficiency, we propose a bilateral participation scheme where the manufacturerrsquos national brand-name advertisement expense is also properly shared by the retailers. It is shown that bilateral participation scheme is able to coordinate the distribution channel under very general channel structures and sales response functions. In particular, the channel remainscoordinated when the retailers compete with each other and their sales response functions are general enough to capture the stealing and spillover effects. In addition, for any unilateral participation scheme, we can construct a bilateral participation scheme that leads to a strict Pareto improvement. Finally, we extend the model to cases where channel membersrsquo participation rates are endogenously determined by themselves as well as cases that incorporate channel membersrsquo pricing decisions.
Bio：
Bintong Chen is professor of Business Administration at University of Delaware. He received his Ph.D. in operations management/research from the Wharton School, M.S. in systems engineering from the University of Pennsylvania, and dual B.S. degrees in ship-building and naval architecture as well as electrical engineering from Shanghai Jiao Tong University in China. His research interests include optimization techniques and applied business modeling. He has published over 35 articles in high quality academic journals and his research work has been widely cited. He is currently a senior editor for {\em Production and Operations Management}. He has taught operations management/research related classes at undergraduate, MBA, and Ph.D. levels. He has supervised and worked on business projects for JPMC, Delaware Department of Transportation, Nordstrom, Cascade Natural Gas Corporation, Key Bank, Northwest Dairy Farm, Burlington Northern Rail, ATT. He received several teaching, research, and faculty excellence awards at both college and university levels. More recently, he was appointed the oversea Dean for the School of Business Administration, Southwestern University of Finance and Economics in China. He received the Chang Jiang Scholar award from the Chinese Ministry of Education.
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