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A Model of Targeted Advertising Based on Consumer Purchase History

In: Liss 2012

Author

Listed:
  • Jianqiang Zhang

    (Southeast University)

  • Weijun Zhong

    (Southeast University)

  • Shue Mei

    (Southeast University)

Abstract

This chapter develops a two-period sales model to investigate the competitive effects of targeted advertising based on consumer purchase history. We find that, the firm’s ability of targeting may damage industry profits, consumer surplus and even social welfare. The conditions under which targeted advertising is positive or negative are derived, showing that competition is softened in the second period but intensified in the first period because of the anticipation behavior of competing firms. It is suggested that firms under competing environments cautiously initiate targeted advertising with appropriate contents.

Suggested Citation

  • Jianqiang Zhang & Weijun Zhong & Shue Mei, 2013. "A Model of Targeted Advertising Based on Consumer Purchase History," Springer Books, in: Zhenji Zhang & Runtong Zhang & Juliang Zhang (ed.), Liss 2012, edition 127, pages 839-844, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-32054-5_117
    DOI: 10.1007/978-3-642-32054-5_117
    as

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