Dynamic cooperative advertising in a channel

The paper studies a two-member channel in which a manufacturer and an exclu sive retailer can make advertising expenditures that have both short and lo ng term impacts on the retailer's sales. The manufacturer can also support both retailer's advertising efforts through a cooperative advertising progr am. Four scenarios are considered III the first, which acts as a benchmark, the manufacturer provides no support to the retailer's advertising. In the second, the manufacturer supports both types of retailer advertising. In t he two remaining cases, the manufacturer supports only one of the two types of retailer advertising efforts. II I all cases we assume that the manufac turer wishes to coordinate the channel so as to obtain maximal profits for himself: Our analysis of these options skews that supporting both types of retailer advertising provides more profit to both channel members than any of the two cases of partial support. The latter is, however, better than no support. We derive managerial implications from the theoretical results.