The Impact of Pricing and Advertising on Competition between Manufacturer and Retailer Despite Direct Sales, Study: Coffee Processing and Distribution Supply Chain

Because members of a supply chain, such as manufacturers and retailers, are constantly interacting or competing with each other over time and in a repetitive process, modeling the supply chain structure in the form of dynamic games becomes more important and necessary. Increasing public access to cyberspace and, consequently, increasing online shopping and increasing the desire of manufacturers to communicate more closely with the consumer community has led to the creation of a new structure in the theoretical framework of the supply chain, called direct or online. By creating a direct sales department in a supply chain, retailers in customer acquisition and ultimately more profit consider themselves a competitor to the manufacturer. So far, in none of the models presented in the theoretical framework, competitive pricing and dynamic advertising in the two-part supply chain has been discussed; Therefore, the purpose of this study is to investigate the equilibrium behavior in the coffee”s  supply chain despite online sales, Also, the state variable in this study is the amount of credit that is obtained by global advertising of  manufacturer and this is one of the differences aspects between the present study and previous research. The results of the study of the model in the coffee industry supply chain include a higher equilibrium price of online sales of the product than the retail price. Also, the volume of producer's advertisements in the online section is more than the volume of local retail advertisements, and the volume of retail advertisements is more than the volume of nationwide manufacturer's advertisements. In this regard, the profit of the producer in the online sector is always more than the profit of the retailer in the traditional retail sector. Sensitivity analysis of equilibrium levels of optimal variables with respect to changes in game parameters also shows three incremental, decreasing and combined trends in changes in equilibrium levels with respect to increasing the value of model parameters.