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Title: Co-marketing alliance for international brands
Authors: Xiao, Zuhui
Degree: M.Phil.
Issue Date: 2011
Abstract: Among various types of cooperation strategies, co-marketing partnership is one kind of lateral relationship between firms at the same level in the value chain. Although co-marketing partnership is growing in popularity recently, it has received little attention in the literature. This thesis aims to quantify the benefit of co-marketing partnership and to provide a game theoretical perspective on how this type of cooperation creates value for partnering firms and even international brand, their common upstream suppliers. This thesis examines equilibrium strategies and performance of both first best situation and decentralized-decision situations. In a first-best situation, we explore the potential of a co-marketing alliance and find that its value (i.e. an additional and different marketing effort) is mainly driven by the complementing power and the reduction in cost because of the co-marketing effort. In situations where firms make their decisions separately, we compare four models with a benchmark model (before alliance) under two different business scenarios and with two different profit-sharing mechanisms. We work out the equilibrium strategies for the firms involved in all these situations, and derive market conditions under which co-marketing alliance activities can improve supplier's and distributor's performance. These conditions can provide the theoretical basis for managers to decide how to improve firms' performance during the alliance process It is worth noting that as shown by our results, the value of a co-marketing alliance is determined by the complementing power brought by the co-marketing partner and the cost reduction effect brought by this new structure of cooperation. In a first-best situation, the alliance can benefit from an extra effort put in at a lower effort cost. In the situations where players make their decisions separately, it is intuitive that the original system can achieve better performance when a third party introduced, a co-marketing partner, can bring positive influence to demand. Unexpectedly, we find that even when the co-marketing partner might bring negative influence to the demand, the firms involved still achieve better performance under certain market conditions. It is due to the positive influence brought by this new structure of partnership which compensates the effort cost put in. In addition, as indicated in the numerical studies, the cooperation activities can help the firms with promoting products of even lower price sensitivity. It is also worth noting that the co-marketing cooperation activities are especially suitable for the products with relative low price sensitivity in the market. The numerical studies add to the implications by comparing the performance of supplier and distributor between the models. For Scenario I where the distributor pays for the co-marketing partner's effort, the performance with revenue sharing mechanism is better than that of fixed-payment mechanism under the same settings. While in Scenario II where the supplier pays for the co-marketing partner's effort, fixed payment is favor to improve the supplier's performance compared with revenue sharing mechanism.
Subjects: Marketing -- Management.
Brand name products -- Marketing.
Hong Kong Polytechnic University -- Dissertations
Pages: 81 p. : ill. ; 30 cm.
Appears in Collections:Thesis

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