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Optimal Advertising Strategies

Author

Listed:
  • Maurice W. Sasieni

    (Ealing College of Higher Education, London)

Abstract

This paper considers advertising policies for a very general class of response functions. It is shown that if a pulsing policy is used, awareness (or sales) eventually settle down to a steady cycle and the average response over the cycle is a decreasing function of the length of the cycle. When response shows increasing returns to scale, it is possible (in theory) to use a device called to replace the true response by a straight line which lies above the true response in the region in which chattering is used. A numerical example is given to show how the optimal policy can be computed when part of the response is linear and the results obtained are compared with those of the best practicable approximation to chattering. It is shown that the problem of maximising awareness or sales, subject to a budget constraint, is structurally identical with maximising profit after advertising, with or without a constraint. In either case it is possible that, for part of the time, the optimal policy involves chattering.

Suggested Citation

  • Maurice W. Sasieni, 1989. "Optimal Advertising Strategies," Marketing Science, INFORMS, vol. 8(4), pages 358-370.
    • Handle: RePEc:inm:ormksc:v:8:y:1989:i:4:p:358-370
    DOI: 10.1287/mksc.8.4.358
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    Citations

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    Cited by:

    1. Keita Kinjo & Takeshi Ebina, 2016. "An Advertising Strategy Using Consumption Externality and Forgetting in the Case of Japanese Electronic Books," The Review of Socionetwork Strategies, Springer, vol. 10(2), pages 55-71, December.
    2. Praveen K. Kopalle & João L. Assunção, 2000. "When (not) to indulge in 'puffery': the role of consumer expectations and brand goodwill in determining advertised and actual product quality," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 223-241.
    3. Saffer, Henry & Chaloupka, Frank, 2000. "The effect of tobacco advertising bans on tobacco consumption," Journal of Health Economics, Elsevier, vol. 19(6), pages 1117-1137, November.
    4. Martín-Herrán, Guiomar & Sigué, Simon P., 2017. "An integrative framework of cooperative advertising: Should manufacturers continuously support retailer advertising?," Journal of Business Research, Elsevier, vol. 70(C), pages 67-73.
    5. C. Robert Clark & Ignatius J. Horstmann, 2005. "Advertising and Coordination in Markets with Consumption Scale Effects," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(2), pages 377-401, June.
    6. Ganesh Iyer & David Soberman & J. Miguel Villas-Boas, 2005. "The Targeting of Advertising," Marketing Science, INFORMS, vol. 24(3), pages 461-476, May.
    7. Fred M. Feinberg, 2001. "On Continuous-Time Optimal Advertising Under S-Shaped Response," Management Science, INFORMS, vol. 47(11), pages 1476-1487, November.
    8. Koen Pauwels & Imran Currim & Marnik Dekimpe & Dominique Hanssens & Natalie Mizik & Eric Ghysels & Prasad Naik, 2004. "Modeling Marketing Dynamics by Time Series Econometrics," Marketing Letters, Springer, vol. 15(4), pages 167-183, December.
    9. Toker Doganoglu & Daniel Klapper, 2006. "Goodwill and dynamic advertising strategies," Quantitative Marketing and Economics (QME), Springer, vol. 4(1), pages 5-29, March.
    10. Mesak, Hani Ibrahim & Bari, Abdullahel & Lian, Qin, 2015. "Pulsation in a competitive model of advertising-firm's cost interaction," European Journal of Operational Research, Elsevier, vol. 246(3), pages 916-926.
    11. Yoau-Chau Jeng & Fei-Rung Chiu, 2010. "Allocation model for theme park advertising budget," Quality & Quantity: International Journal of Methodology, Springer, vol. 44(2), pages 333-343, February.
    12. Gijsenberg, Maarten J. & Nijs, Vincent R., 2019. "Advertising spending patterns and competitor impact," International Journal of Research in Marketing, Elsevier, vol. 36(2), pages 232-250.
    13. Mesak, Hani I., 1999. "On the generalizability of advertising pulsation monopoly results to an oligopoly," European Journal of Operational Research, Elsevier, vol. 117(3), pages 429-449, September.
    14. Jonker, J.-J. & Piersma, N. & Van den Poel, D., 2002. "Joint optimization of customer segmentation and marketing policy to maximize long-term profitability," Econometric Institute Research Papers EI 2002-18, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    15. Mesak, Hani I. & Ellis, T. Selwyn, 2009. "On the superiority of pulsing under a concave advertising market potential function," European Journal of Operational Research, Elsevier, vol. 194(2), pages 608-627, April.
    16. Mesak, Hani I. & Calloway, James A., 1995. "A pulsing model of advertising competition: A game theoretic approach, part A -- Theoretical foundation," European Journal of Operational Research, Elsevier, vol. 86(2), pages 231-248, October.

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