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On the superiority of pulsing under a concave advertising market potential function

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  • Mesak, Hani I.
  • Ellis, T. Selwyn

Abstract

The authors study the superiority of advertising pulsing policy (turning advertising on and off in a cyclic fashion) over its uniform (constant spending) counterpart that costs the same under the assumption that sales dynamics follow a modified Vidale-Wolfe aggregate advertising model. The authors show that pulsing can be superior if the product of the concave market potential function and the linear or concave advertising response function is convex in advertising. Similar to previous studies in the literature, the average undiscounted profit over the infinite planning horizon is considered as a performance measure according to which alternative advertising pulsation policies are compared. Employing a well-known data set relating advertising to sales, the above convexity requirement is empirically supported and the superiority of pulsing is established numerically. The performance of the proposed model is found to be superior to two rival models using a one-step-ahead forecasting procedure. The analytical findings of the study are documented into six theoretical results for which proofs are relegated to a separate appendix. Managerial implications of the study and directions for future research are also discussed.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:ejores:v:194:y:2009:i:2:p:608-627
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. Huang, Jian & Leng, Mingming & Liang, Liping, 2012. "Recent developments in dynamic advertising research," European Journal of Operational Research, Elsevier, vol. 220(3), pages 591-609.
    4. Haase, Knut & Müller, Sven, 2014. "Upper and lower bounds for the sales force deployment problem with explicit contiguity constraints," European Journal of Operational Research, Elsevier, vol. 237(2), pages 677-689.

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