Journal
TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW
Volume 130, Issue -, Pages 95-107Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.tre.2019.08.009
Keywords
Multi-product supply chain coordination; Advertisement; Luxury fashion products; Different brand tiers; Risk attitudes; Market share
Categories
Funding
- RGC(HK) under the GRF funding scheme [152294/16E]
- Beijing Municipal Education Commission in China [CITTCD201804043]
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Advertisement is critical in luxury fashion supply chains. In this paper, we analytically explore the optimal advertisement budget allocation strategy and coordination challenge when there are multiple brand-tier products in the market. In the basic model, we focus our analyses with respect to different risk attitudes that the luxury fashion brand takes and the coordination mechanisms. We show that irrespective of risk attitudes of the luxury fashion brand, the optimal advertisement strategy is a polarized strategy. We derive the coordination mechanisms to overcome the double marginalization effect for each risk attitude case. In the extended model, with the market share considerations, the optimal advertisement strategy is derived and is shown to be no longer polarized in general.
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