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IJSTR >> Volume 9 - Issue 3, March 2020 Edition



International Journal of Scientific & Technology Research  
International Journal of Scientific & Technology Research

Website: http://www.ijstr.org

ISSN 2277-8616



The Advantages Of Cooperative Game Model In Enterprises Interaction In Vertical Marketing Channels By Varying Small Values Of Parameters Of The Advertising Cost Response Function

[Full Text]

 

AUTHOR(S)

Natalia Danyliuk, Alla Zhemba, Oleksandr Dyma, Olga Sazonets, Olena Kachan

 

KEYWORDS

advertising cost response function, business game strategy, cooperative game, Nash equilibrium, profit, retail price, transfer price.

 

ABSTRACT

Research of business interaction in marketing channels is often associated with the necessity to study the optimal business game scenarios, which provide the best implementation of enterprises business behavior strategies and maximize their profits. In such situations involvement of game-theoretic modeling apparatus in the process of determining key factors influencing profits formation of manufacturers and retailers, contributes to a better understanding of the cause and the effect relationships between the magnitude of profits, interpreted in the form of indicators of business strategies, and creates the prerequisites for finding ways of sharing joint profits in marketing channels. The purpose of study is to find optimal values in terms of channel members profits maximizing of the parameters of the advertising cost response function, in which the manufacturer and the retailer by agreement make decisions on the implementation of business game strategies, including pricing strategies and strategies for generating joint advertising costs. The paper presents a numerical experiment on the possible values of the parameters of the advertising cost response function, which takes into account the recommendations of the practice of enterprises functioning in distribution channels. Mathematical calculations have been made, which allow to build a model of cooperative game of the manufacturer and the retailer, based on the non-dimensional form of retail price values as well as values of joint advertising costs. The optimal solution of cooperative game, which within the numerical experiment is presented as the possible maximum values of profits of the manufacturer, the retailer and the vertical marketing channel, is made. The comparative analysis of the solutions of cooperative game and non-cooperative game, which involves the formation of Nash equilibrium, is given to determine the benefits of cooperative game model for both participants of the vertical marketing channel in terms of maximizing their profits and profit of the channel as a whole. The results obtained can be an information base for further calculations and comparisons of cooperative and non-cooperative models as interactions between participants of supply chains. In addition, the results of numerical simulations form the initial base for comparisons with other variants of cooperative game model, which involve changing a range and a step change of output values of the model.

 

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