Abstract
Since the advent of the Web, retailers who served consumers offline (ie in stores or via catalogue) have grappled with how to effectively integrate the Internet into their marketing strategies and tactics. Clearly, how a firm elects to integrate the Internet into its retailing process, and how it coordinates offline and online strategic decisions, can impact its performance. In this paper, we examine integration decisions from a cooperative advertising perspective to determine the profitability of various integration strategies. We find that profit is greater when using a ‘partial-integration’ strategy rather than a ‘separation’ strategy; moreover, we find that profit is yet greater when using a ‘full-integration’ strategy rather than a ‘partial-integration’ strategy.
Similar content being viewed by others
References
Atkinson RD (2001). The Revenge of the Disintermediated: How the Middleman is Fighting E-Commerce and Hurting Consumers. Policy Paper. Progressive Policy Institute: Washington, DC.
Bakos Y (1998). Towards friction-free markets: the emerging role of electronic marketplaces on the internet. Commun ACM 41: 35–42.
Benjamin R and Wigand R (1995). Electronic markets and virtual value chains on the information superhighway. Sloan Mngt Rev 36: 61–72.
Bergen M and John G (1997). Understanding co-operative advertising participation rates in conventional channels. J Marketing Res 34: 357–369.
Berger PD and Magliozzi T (1992). Optimal co-operative advertising decisions in direct-mail operations. J Opl Res Soc 43: 1079–1086.
Berger PD (1972). Vertical cooperative advertising ventures. J Marketing Res 9: 309–312.
Berger PD (1973). Statistical analysis of cooperative advertising models. Opl Res Quart 24: 207–216.
Bruner III GC and Kumar A (2005). Explaining consumer acceptance of handheld internet devices. 2005. J Bus Res 58: 553–558.
Chakravarti D, Mitchell AA and Staelin R (1978). Judgment based marketing decision models: an investigation of the decision calculus approach. Mngt Sci 25: 251–263.
Chintagunta P and Jain D (1992). A dynamic model of channel member strategies for marketing expenditures. Marketing Sci 11: 168–188.
Choi SC (1991). Price competition in a channel structure with a common retailer. Marketing Sci 20: 271–296.
Dant R and Berger PD (1996). Modeling cooperative advertising decisions in franchising. J Opl Res Soc 47: 1120–1136.
Dean DH (2002). Associating the cooperation with a charitable event through sponsorship: Measuring the effects on corporate community relations. J Advertising 31: 77–87.
Elkin T (2001). Intel inside at 10. Advertising Age 72: 4–6.
Green J (2000). Still pulling the strings, but locally too. Brandweek 41: 34–42.
Gulati R and Garino J (2000). Get the right mix of bricks & clicks. Harvard Bus Rev 78: 107–114.
Gulati R and Oldroyd JB (2005). The quest for customer focus. Harvard Bus Rev 83: 92–101.
Hanssens DM, Leeflang P and Wittink DR (2005). Market response models and marketing practice. Appl Stochastic Models Bus Indus 21(4–5): 423–424.
Heider F (1946). Attitudes and cognitive organization. J Psychol 21: 107–112.
Heider F (1958). The Psychology of Interpersonal Relationships. Wiley: New York.
Ingene CA and Parry M (1995). Coordination and manufacturer profit maximization: the multiple retailer channel. J Retailing 71: 129–151.
Jorgensen S, Taboubi S and Zaccour G (2003). Retail promotions with negative brand images: is cooperation possible? Eur J Opl Res 150: 395–405.
Kumar N (1996). The power of trust in manufacturer–retailer relationships. Harvard Bus Rev 74: 92–105.
Lightfoot W (2003). Multi-channel mistake: the demise of a successful retailer. Int J Retail Distrib 31: 220–229.
Lilien GL, Kotler P and Moorthy KS (1995). Marketing Models. Prentice-Hall: Edgewood Cliffs, NJ.
Lilien GL and Rangaswamy A (2003). Marketing Engineering. Prentice-Hall: Upper Saddle River.
Little JDC (1970). Models and managers: the concept of a decision calculus. Mngt Sci 16: 466–484.
Lodish LM, Curtis E, Ness M and Ness KM (1988). Salesforce sizing and deployment using a decision calculus model at Syntex Laboratories. Interfaces 18 (1): 5–20.
Malone TW, Yates J and Benjamin RI (1987). Electronic markets and electronic hierarchies. Commun ACM 30: 484–497.
Mohl B (2004). Too little, too late? blockbuster is revamping its late-fee policy to lure back customers. Boston Sunday Globe August 1: E1–E9.
Nysveen H, Pedersen PE, Thorbjørnsen H and Berthon P (2005). Mobilizing the brand: the effects of mobile services on brand relationships and main channel use. J Serv Res 7: 257–276.
Phillips JM, Liu BS and Costello TG (1998). A balance theory perspective of triadic supply chain relationships. J Marketing Theory Practice 6: 78–91.
Rangaswamy A and Van Bruggen G (2005). Opportunities and challenges in multichannel marketing: an introduction to the special issue. J Interactive Marketing 19 (2): 5–11.
Sarkar MB, Butler B and Steinfield C (1995). Intermediaries and cybermediaries: a continuing role for mediating players in the electronic marketplace. J Comput-Mediated Commun 1: online at http://www.ascusc.org/jcmc/vol1/issue3/sarkar.html
Sarkar MB, Butler B and Steinfield C (1998). Cybermediaries in electronic marketspace: toward theory building. J Bus Res 41: 215–221.
Watson RT, Berthon P, Pitt LE and Zinkham GM (2000). Electronic Commerce: The Strategic Perspective. The Dryden Press: Orlando.
Vidale ML and Wolfe HB (1957). An operations-research study of sales response to advertising. Opns Res 5: 370–381.
Woodside AG (2004). Associating the cooperation with a charitable event through sponsorship: measuring the effects on corporate community relations. Psychol Marketing 21: 279–294.
Woodside AG and Chebat JC (2001). Updating Heider's balance theory in consumer behavior: a Jewish couple buys a German car and additional buying–consuming transformation stories. Psychol Marketing 18: 475–495.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Berger, P., Lee, J. & Weinberg, B. Optimal cooperative advertising integration strategy for organizations adding a direct online channel. J Oper Res Soc 57, 920–927 (2006). https://doi.org/10.1057/palgrave.jors.2602069
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1057/palgrave.jors.2602069