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Multiproduct Advertising Budgeting

Author

Listed:
  • Peter Doyle

    (University of Warwick)

  • John Saunders

    (Loughborough University)

Abstract

The problem of optimizing advertising across a broad product range, where significant cross elasticities are likely, is explored. A linear-in-logs model is proposed and allocation rules for budgeting across products and media are derived. The model is estimated for a large European variety store chain. The results suggest profits could be increased by nearly 40 percent with no change in the advertising budget, if management shifted from the conventional bottom-up approach to the more systematic method outlined. The final section describes how management implemented the model.

Suggested Citation

  • Peter Doyle & John Saunders, 1990. "Multiproduct Advertising Budgeting," Marketing Science, INFORMS, vol. 9(2), pages 97-113.
    • Handle: RePEc:inm:ormksc:v:9:y:1990:i:2:p:97-113
    DOI: 10.1287/mksc.9.2.97
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    Cited by:

    1. Yang, Chaolin & Xiong, Yi, 2020. "Nonparametric advertising budget allocation with inventory constraint," European Journal of Operational Research, Elsevier, vol. 285(2), pages 631-641.
    2. Frank M. Bass & Norris Bruce & Sumit Majumdar & B. P. S. Murthi, 2007. "Wearout Effects of Different Advertising Themes: A Dynamic Bayesian Model of the Advertising-Sales Relationship," Marketing Science, INFORMS, vol. 26(2), pages 179-195, 03-04.
    3. Foroudi, Pantea & Melewar, T.C. & Gupta, Suraksha, 2014. "Linking corporate logo, corporate image, and reputation: An examination of consumer perceptions in the financial setting," Journal of Business Research, Elsevier, vol. 67(11), pages 2269-2281.
    4. Karray Salma & Martín-Herrán Guiomar, 2008. "Investigating the Relationship Between Advertising and Pricing in a Channel with Private Label Offering: A Theoretic Model," Review of Marketing Science, De Gruyter, vol. 6(1), pages 1-39, August.
    5. Beltran-Royo, C. & Zhang, H. & Blanco, L.A. & Almagro, J., 2013. "Multistage multiproduct advertising budgeting," European Journal of Operational Research, Elsevier, vol. 225(1), pages 179-188.
    6. Beltran-Royo, C. & Escudero, L.F. & Zhang, H., 2016. "Multiperiod Multiproduct Advertising Budgeting: Stochastic Optimization Modeling," Omega, Elsevier, vol. 59(PA), pages 26-39.
    7. Dinesh Kumar Gauri & Janos Gabor Pauler & Minakshi Trivedi, 2009. "Benchmarking Performance in Retail Chains: An Integrated Approach," Marketing Science, INFORMS, vol. 28(3), pages 502-515, 05-06.
    8. Leeflang, Peter S.H. & Parreño Selva, Josefa & Van Dijk, Albert & Wittink, Dick R., 2008. "Decomposing the sales promotion bump accounting for cross-category effects," International Journal of Research in Marketing, Elsevier, vol. 25(3), pages 201-214.
    9. Edlira Shehu & Tim Prostka & Christina Schmidt-Stölting & Michel Clement & Eva Blömeke, 2014. "The influence of book advertising on sales in the German fiction book market," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(2), pages 109-130, May.
    10. Xiaojing Dong & Ramkumar Janakiraman & Ying Xie, 2014. "The Effect of Survey Participation on Consumer Behavior: The Moderating Role of Marketing Communication," Marketing Science, INFORMS, vol. 33(4), pages 567-585, July.
    11. Guitart, Ivan A. & Gonzalez, Jorge & Stremersch, Stefan, 2018. "Advertising non-premium products as if they were premium: The impact of advertising up on advertising elasticity and brand equity," International Journal of Research in Marketing, Elsevier, vol. 35(3), pages 471-489.
    12. Zenetti, German & Klapper, Daniel, 2016. "Advertising Effects Under Consumer Heterogeneity – The Moderating Role of Brand Experience, Advertising Recall and Attitude," Journal of Retailing, Elsevier, vol. 92(3), pages 352-372.
    13. 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.
    14. Zhang, Wenqing & Li, Shanling & Zhang, Dan & Hou, Wenhua, 2014. "On the impact of advertising initiatives in supply chains," European Journal of Operational Research, Elsevier, vol. 234(1), pages 99-107.
    15. Marc Fischer & Sönke Albers & Nils Wagner & Monika Frie, 2011. "Practice Prize Winner --Dynamic Marketing Budget Allocation Across Countries, Products, and Marketing Activities," Marketing Science, INFORMS, vol. 30(4), pages 568-585, July.
    16. Sönke Albers, 1998. "Regeln für die Allokation eines Marketing-Budgets auf Produkte oder Marktsegmente," Schmalenbach Journal of Business Research, Springer, vol. 50(3), pages 211-235, March.
    17. Lee, Ju-Yeon & Sridhar, Shrihari & Palmatier, Robert W., 2017. "The effect of firms' structural designs on advertising and personal selling returns," International Journal of Research in Marketing, Elsevier, vol. 34(1), pages 173-193.
    18. Karray, Salma & Martín-Herrán, Guiomar, 2009. "A dynamic model for advertising and pricing competition between national and store brands," European Journal of Operational Research, Elsevier, vol. 193(2), pages 451-467, March.
    19. 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.
    20. Ivan Guitart & Jorge Gonzalez & Stefan Stremersch, 2018. "Advertising non-premium products as if they were premium : The impact of advertising up on advertising elasticity and brand equity," Post-Print hal-02312175, HAL.
    21. Gahler, Daniel & Hruschka, Harald, 2016. "Resource Allocation Heuristics for Unknown Sales Response Functions with Additive Disturbances," University of Regensburg Working Papers in Business, Economics and Management Information Systems 488, University of Regensburg, Department of Economics.
    22. Bielecki, Andre & Albers, Sönke & Mantrala, Murali, 2012. "Salesperson Efficiency Benchmarking Using Sales Response Data: Who is Working Hard and Working Smart?," EconStor Preprints 57427, ZBW - Leibniz Information Centre for Economics.

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    Keywords

    advertising; retailing;

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