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Optimal and Near Optimal Price and Advertising Strategies for Finite and Infinite Horizons

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  • Ulf Peter Welam

    (Boston University)

Abstract

The simplest price and advertising optimization model consistent with current empirical research is formulated and analyzed. An explicit horizon function is introduced to compare and synthesize the finite and infinite horizon situations. The practically prevalent procedure of setting this period's advertising expenditure proportional to the previous period's sales is, for good reasons, declared near optimal.

Suggested Citation

  • Ulf Peter Welam, 1982. "Optimal and Near Optimal Price and Advertising Strategies for Finite and Infinite Horizons," Management Science, INFORMS, vol. 28(11), pages 1313-1327, November.
    • Handle: RePEc:inm:ormnsc:v:28:y:1982:i:11:p:1313-1327
    DOI: 10.1287/mnsc.28.11.1313
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    Cited by:

    1. Roucan-Kane, Maud & Peake, Whitney O., 2007. "Milking The Most From Your Promotional Dollars: An Analysis Of Agribusiness Firms Serving U.S.Agricultural Producers," Working papers 7331, Purdue University, Department of Agricultural Economics.
    2. Dengpan Liu & Subodha Kumar & Vijay S. Mookerjee, 2012. "Advertising Strategies in Electronic Retailing: A Differential Games Approach," Information Systems Research, INFORMS, vol. 23(3-part-2), pages 903-917, September.
    3. Xin Chen & Chung‐Lun Li & Byong‐Duk Rhee & David Simchi‐Levi, 2007. "The impact of manufacturer rebates on supply chain profits," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(6), pages 667-680, September.

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    Keywords

    marketing; advertising rules;

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