IDEAS home Printed from https://ideas.repec.org/a/spr/joptap/v109y2001i3d10.1023_a1017567805831.html
   My bibliography  Save this article

Feedback Competitive Advertising Strategies with a General Objective Function

Author

Listed:
  • G. Fruchter

    (Bar-Ilan University
    Hong Kong University of Science and Technology)

  • G. M. Erickson

    (University of Washington)

  • S. Kalish

    (Tel Aviv University)

Abstract

We introduce a general objective function, which incorporates competitive situations, such as conservative, punitive, and predatory advertising. Linking together the particular situations into a two-parameter family of max–min problems, and using the Lanchester model to describe the dynamics of the market, a bilinear-quadratic differential game is obtained. For this game, we find saddle-point feedback time-invariant advertising strategies and show when these strategies are Nash equilibrium strategies. In an empirical application involving duopolistic competition in the cola market, we find evidence of a punitive motivation for the advertising strategies.

Suggested Citation

  • G. Fruchter & G. M. Erickson & S. Kalish, 2001. "Feedback Competitive Advertising Strategies with a General Objective Function," Journal of Optimization Theory and Applications, Springer, vol. 109(3), pages 601-613, June.
    • Handle: RePEc:spr:joptap:v:109:y:2001:i:3:d:10.1023_a:1017567805831
    DOI: 10.1023/A:1017567805831
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1023/A:1017567805831
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1023/A:1017567805831?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kenneth R. Deal, 1979. "Optimizing Advertising Expenditures in a Dynamic Duopoly," Operations Research, INFORMS, vol. 27(4), pages 682-692, August.
    2. Gary M. Erickson, 1992. "Empirical Analysis of Closed-Loop Duopoly Advertising Strategies," Management Science, INFORMS, vol. 38(12), pages 1732-1749, December.
    3. Osborne, D K, 1974. "A Duopoly Price Game," Economica, London School of Economics and Political Science, vol. 41(162), pages 157-175, May.
    4. Pradeep K. Chintagunta & Naufel J. Vilcassim, 1992. "An Empirical Investigation of Advertising Strategies in a Dynamic Duopoly," Management Science, INFORMS, vol. 38(9), pages 1230-1244, September.
    5. Dan Horsky, 1977. "An Empirical Analysis of the Optimal Advertising Policy," Management Science, INFORMS, vol. 23(10), pages 1037-1049, June.
    6. Gila E. Fruchter & Shlomo Kalish, 1997. "Closed-Loop Advertising Strategies in a Duopoly," Management Science, INFORMS, vol. 43(1), pages 54-63, January.
    7. George E. Kimball, 1957. "Some Industrial Applications of Military Operations Research Methods," Operations Research, INFORMS, vol. 5(2), pages 201-204, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fruchter, Gila E. & Kalish, Shlomo, 1998. "Dynamic promotional budgeting and media allocation," European Journal of Operational Research, Elsevier, vol. 111(1), pages 15-27, November.
    2. 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.
    3. Marshall Freimer & Dan Horsky, 2012. "Periodic Advertising Pulsing in a Competitive Market," Marketing Science, INFORMS, vol. 31(4), pages 637-648, July.
    4. Fruchter, Gila E. & Messinger, Paul R., 2003. "Optimal management of fringe entry over time," Journal of Economic Dynamics and Control, Elsevier, vol. 28(3), pages 445-466, December.
    5. 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.
    6. Frank M. Bass & Anand Krishnamoorthy & Ashutosh Prasad & Suresh P. Sethi, 2005. "Generic and Brand Advertising Strategies in a Dynamic Duopoly," Marketing Science, INFORMS, vol. 24(4), pages 556-568, February.
    7. Richards, Timothy J., 2002. "Dynamic Strategic Interaction: A Synthesis Of Modeling Methods," Western Economics Forum, Western Agricultural Economics Association, vol. 1(1), pages 1-5.
    8. Gary M. Erickson, 2009. "Advertising Competition in a Dynamic Oligopoly with Multiple Brands," Operations Research, INFORMS, vol. 57(5), pages 1106-1113, October.
    9. Wang, Qinan & Wu, Zhang, 2001. "A duopolistic model of dynamic competitive advertising," European Journal of Operational Research, Elsevier, vol. 128(1), pages 213-226, January.
    10. Machowska Dominika, 2018. "Investigating the role of customer churn in the optimal allocation of offensive and defensive advertising: the case of the competitive growing market," Economics and Business Review, Sciendo, vol. 4(2), pages 3-23, June.
    11. Erickson, Gary M., 2009. "An oligopoly model of dynamic advertising competition," European Journal of Operational Research, Elsevier, vol. 197(1), pages 374-388, August.
    12. Toker Doganoglu & Daniel Klapper, 2006. "Goodwill and dynamic advertising strategies," Quantitative Marketing and Economics (QME), Springer, vol. 4(1), pages 5-29, March.
    13. A. Prasad & S. P. Sethi, 2004. "Competitive Advertising Under Uncertainty: A Stochastic Differential Game Approach," Journal of Optimization Theory and Applications, Springer, vol. 123(1), pages 163-185, October.
    14. Yanwu Yang & Baozhu Feng & Joni Salminen & Bernard J. Jansen, 2022. "Optimal advertising for a generalized Vidale–Wolfe response model," Electronic Commerce Research, Springer, vol. 22(4), pages 1275-1305, December.
    15. Martín-Herrán, Guiomar & McQuitty, Shaun & Sigué, Simon Pierre, 2012. "Offensive versus defensive marketing: What is the optimal spending allocation?," International Journal of Research in Marketing, Elsevier, vol. 29(2), pages 210-219.
    16. Hui Li & Qiaowei Shen & Yakov Bart, 2021. "Dynamic Resource Allocation on Multi-Category Two-Sided Platforms," Management Science, INFORMS, vol. 67(2), pages 984-1003, February.
    17. Erickson, Gary M., 1995. "Differential game models of advertising competition," European Journal of Operational Research, Elsevier, vol. 83(3), pages 431-438, June.
    18. Michèle Breton & Ramla Jarrar & Georges Zaccour, 2006. "A Note on Feedback Sequential Equilibria in a Lanchester Model with Empirical Application," Management Science, INFORMS, vol. 52(5), pages 804-811, May.
    19. Miltiadis Chalikias & Michalis Skordoulis, 2017. "Implementation of F.W. Lanchester’s combat model in a supply chain in duopoly: the case of Coca-Cola and Pepsi in Greece," Operational Research, Springer, vol. 17(3), pages 737-745, October.
    20. El Ouardighi, Fouad & Pasin, Federico, 2006. "Quality improvement and goodwill accumulation in a dynamic duopoly," European Journal of Operational Research, Elsevier, vol. 175(2), pages 1021-1032, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joptap:v:109:y:2001:i:3:d:10.1023_a:1017567805831. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.