Implications of Advertising Lag on the Dynamic Optimal Decisions in an O2O Supply Chain
The advertising lag effect and the reference quality effect are intrinsic properties of the market that influence supply chain performance. In this paper, we use the differential game theory considering the above two effects under an O2O (online to offline) environment. We investigate how these two...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Wiley
2021-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2021/6681319 |
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| _version_ | 1850167070122049536 |
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| author | Xiuxian Li Ling Li Xinyu Wang Shuhua Zhang |
| author_facet | Xiuxian Li Ling Li Xinyu Wang Shuhua Zhang |
| author_sort | Xiuxian Li |
| collection | DOAJ |
| description | The advertising lag effect and the reference quality effect are intrinsic properties of the market that influence supply chain performance. In this paper, we use the differential game theory considering the above two effects under an O2O (online to offline) environment. We investigate how these two effects impact supply chain performance. By the extended maximum principle, the optimal analytical solutions of the decision variables in two different game scenarios are obtained, i.e., with and without advertising cooperation. We conclude that the optimal wholesale price (advertising effort level, product quality level, and retail price) increases or decreases exponentially to its steady state, which depends on whether the initial goodwill is lower than the static goodwill or not. The analysis shows that the advertising lag effect has a negative impact on the supply chain, while the reference quality effect is positive. The vertical advertising cooperation strategy is effective in facilitating the channel performance. From a comparison analysis, we obtain that the manufacturer concentrates more effort on quality improvement if the advertising lag time is larger or if consumers are more sensitive to quality, and the manufacturer pays more attention to advertising relative to quality improvements with a higher advertising cost sharing ratio. |
| format | Article |
| id | doaj-art-db6f4d97183a4fb69752c8d818df3096 |
| institution | OA Journals |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2021-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-db6f4d97183a4fb69752c8d818df30962025-08-20T02:21:17ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2021-01-01202110.1155/2021/66813196681319Implications of Advertising Lag on the Dynamic Optimal Decisions in an O2O Supply ChainXiuxian Li0Ling Li1Xinyu Wang2Shuhua Zhang3College of Science, Tianjin University of Commerce, Tianjin 300134, ChinaBusiness School, Tianjin University of Finance and Economics, Tianjin 300222, ChinaCoordinated Innovation Center for Computable Modeling in Management Science, Tianjin University of Finance and Economics, Tianjin 300222, ChinaCoordinated Innovation Center for Computable Modeling in Management Science, Tianjin University of Finance and Economics, Tianjin 300222, ChinaThe advertising lag effect and the reference quality effect are intrinsic properties of the market that influence supply chain performance. In this paper, we use the differential game theory considering the above two effects under an O2O (online to offline) environment. We investigate how these two effects impact supply chain performance. By the extended maximum principle, the optimal analytical solutions of the decision variables in two different game scenarios are obtained, i.e., with and without advertising cooperation. We conclude that the optimal wholesale price (advertising effort level, product quality level, and retail price) increases or decreases exponentially to its steady state, which depends on whether the initial goodwill is lower than the static goodwill or not. The analysis shows that the advertising lag effect has a negative impact on the supply chain, while the reference quality effect is positive. The vertical advertising cooperation strategy is effective in facilitating the channel performance. From a comparison analysis, we obtain that the manufacturer concentrates more effort on quality improvement if the advertising lag time is larger or if consumers are more sensitive to quality, and the manufacturer pays more attention to advertising relative to quality improvements with a higher advertising cost sharing ratio.http://dx.doi.org/10.1155/2021/6681319 |
| spellingShingle | Xiuxian Li Ling Li Xinyu Wang Shuhua Zhang Implications of Advertising Lag on the Dynamic Optimal Decisions in an O2O Supply Chain Discrete Dynamics in Nature and Society |
| title | Implications of Advertising Lag on the Dynamic Optimal Decisions in an O2O Supply Chain |
| title_full | Implications of Advertising Lag on the Dynamic Optimal Decisions in an O2O Supply Chain |
| title_fullStr | Implications of Advertising Lag on the Dynamic Optimal Decisions in an O2O Supply Chain |
| title_full_unstemmed | Implications of Advertising Lag on the Dynamic Optimal Decisions in an O2O Supply Chain |
| title_short | Implications of Advertising Lag on the Dynamic Optimal Decisions in an O2O Supply Chain |
| title_sort | implications of advertising lag on the dynamic optimal decisions in an o2o supply chain |
| url | http://dx.doi.org/10.1155/2021/6681319 |
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