Finding an optimal dynamic advertising policy |
| |
| Authors: | DENNIS J SWEENEY P ABAD RONALD J DORNOFF |
| |
| Affiliation: | 1. College of Business Administration, University of Cincinnati , Cincinnati, Ohio, 45221, U.S.A.;2. College of Business Administration , University of Cincinnati , Cincinnati, Ohio, 45221, U.S.A. |
| |
| Abstract: | In this paper a solution is presented to an important marketing problem : the timing of advertising expenditure. Using a differential equation to model the relationship between the sales and advertising rates and using profit as a criterion, a synthesis of the optimal dynamic advertising policy as a function of the current sales level and length of the campaign is derived. In addition, using profit as a criterion, the profitability under an optimal dynamic advertising policy is compared with the profits obtained using an optimal static policy. It is shown that a significant increase in profits can result from employing the optimal dynamic policy. |
| |
| Keywords: | |
|
|
