Dynamic Game and Coordination Strategy of Multichannel Supply Chain Based on Brand Competition

Abstract

In this paper, two noncooperative dynamic pricing strategies are used in a supply chain. Two dynamic Stackelberg game models have been built involving both a manufacturer and a retailer assumed to be the leader in order. In the two models, the manufacturer sells national-brand (NB) product to an independent retailer or directly to consumers through a direct channel. The retailers sell a store-brand (SB) product when they sell the NB product coming from the manufacturer. Thus, there is competition both in different channels and in products with different brands. To analyze the complexity of the model, parameter bifurcation diagrams and strange attractor diagrams have been therefore plotted. The results show that the game leader has advantages when the market is stable, but it turns disadvantageous if the state falls into unstable as the game follower can quickly adjust the strategy to seize the market. The wholesale price and the direct selling price are high that they incur larger profits if the manufacturer is dominant, but it gets worse when the adjustment speed increases. While in the model where the retailer plays a dominant role, the increase in the adjustment speed is unfavorable to retailer. By controlling the total cost of the direct channel and increasing channel competition strength and brand competition strength, the manufacturers can increase their profits in the game dominated by the retailer. In addition, the stable region within the system will be narrow since the market is sensitive to the channel competition, brand competition, and advertising indifference.