An examination of the interfaces between operations and advertising strategies

This dissertation is composed of three journals examining the interfaces between the marketing variable of advertising and various aspects of the operations function of the enterprise, namely, (1) production cost [Chapter 2], (2) inventory control [Chapter 3], and (3) service cost learning [Chapter 4]. The first journal identified the optimum advertising allocation policy over time in the presence of a quadratic convex/concave production cost function when the advertising response function is concave using a modified Vidale-Wolfe model. Through analytical proofs and numerical simulations, the results indicated the potential superiority of a pulsation policy in the presence of concavity in the advertising response function only if the production cost function is convex; otherwise, the uniform policy would be optimal. The study is seen as applicable to frequently purchased products in the maturity stage of their life cycles of dominant firms in their industries practicing a zero-inventory policy in a just-in-time environment. The research objective pertaining to the second journal was to study how a firm would adapt optimum ordered quantity/production lot size and optimum advertising expenditure in response to changes in its own parameters, rival\u27s parameters, or parameters that are common to all firms in a symmetric duopoly/oligopoly market. This was accomplished by developing comparative statics (sensitivity analysis) of a symmetric competitive inventory model with advertising-dependent demand based on a market share attraction model. Both optimum advertising expenditure and ordered quantity were found to be sensitive to changes in marketing and operations parameters. The robustness of the symmetric comparative statics was assessed by using data from the brewing industry in the US that represents an asymmetric oligopoly. The empirical analysis indicated that the theoretical results obtained for a symmetric oligopoly remained valid for an oligopoly where each firm had a market share less than 50% and the market shares were further apart from one another. The study is thought to be applicable to low-priced frequently purchased consumer items in competitive mature markets. In the third journal, the original Bass model for new products was modified to incorporate advertising and customers\u27 disadoption to characterize the optimum advertising policy over time for subscriber service innovations where service cost follows a learning curve. After characterizing the optimal policy for a general diffusion model, the results pertaining to a specific diffusion model for which advertising affects the coefficient of innovation were reported. On the empirical side, four alternative diffusion models were estimated and their predictive powers, using a one-step-ahead forecasting procedure, were compared. Empirical research findings suggest that the specific diffusion model considered in this study is not only of theoretical appeal, but also of notable empirical relevance. Taken together, the analytical and empirical findings argue in favor of advertising more heavily during the early stage of the diffusion process of the new subscriber service innovation and including a related message that would predominantly target innovators. Furthermore, it might be inappropriate to model the diffusion of subscriber services as if they were durable goods. The study is thought to be applicable to service innovations that are made available to customers periodically at a subscription fee. Typical examples include, but are not limited to, cable TV, health clubs, pest control, and the internet

An Integrative Framework of Cooperative Advertising: Should Manufacturers Continuously Support Retailer Advertising?.

Producción CientíficaA two-period game is developed in a bilateral monopoly where, besides pricing decisions, the retailer and manufacturer can set their advertising and cooperative advertising support rates for each period. It is demonstrated that, in addition to the established continuous cooperative advertising programs, in which the retailer advertises and the manufacturer supports retailer advertising in each period, two other advertising schedules are possible. First, the retailer advertises in each period, while the manufacturer only supports the second-period advertising. Second, whether or not the manufacturer provides a cooperative advertising program in the first period, the retailer only advertises in the second period and receives advertising support. The conditions under which each of these advertising arrangements is implemented are identified. In a continuous cooperative advertising schedule, the manufacturer may change his advertising support over time depending on the nature of the long-term effects of retailer advertising. The implications of these findings are discussed.The fi rst author's research is partially supported by MEC under projects ECO2011-24352 and ECO2014-52343-P, co- nanced by FEDER funds and the COST Action IS1104 \The EU in the new economic complex geography: models, tools and policy evaluation"

Optimum advertising pulsation strategies: A dynamic programming approach

This study, using the dynamic programming approach, has addressed the problem of optimally allocating a fixed advertising budget of a monopolistic firm over a planning horizon comprised of n equal periods to maximize two popular measures of advertising performance: (1) profits related to the advertising effort (discount factor r = 0), and (2) present value of profits related to the advertising effort (discount factor r \u3e 0). Two dynamic programming models that use the modified Vidale-Wolfe model to represent sales response to advertising are formulated with respect to whether the time value of money is considered. For a planning horizon comprised of four equal time periods, computing routines are developed to solve two sample problems with respect to the dynamic programming models. Sensitivity analyses are performed to assess the impacts of a change in some key model parameters upon the behavior patterns of the optimum dynamic programming advertising policy and the associated total return. Four alternative types of traditional advertising pulsation policies are modeled for the purpose of comparing their performance with the optimum advertising policy determined by dynamic programming. For a planning horizon comprised of four equal time periods, computing routines are also developed to generate total returns under these traditional advertising pulsation policies. Computational results show that the performance under the optimal advertising policy determined by dynamic programming, as expected, is at least as good as the maximum performance among the four traditional advertising pulsation policies. The plausibility of the modified Vidale-Wolfe model is empirically examined using the well-known Lydia Pinkham vegetable compound annual data covering the period from 1907 to 1960. Model parameters have been estimated using the Gauss-Newton algorithm related to nonlinear regression. The model selected is one corrected for first-order autoregressive residuals. The empirical results indicate that the model parameters are statistically significant and of the expected signs. More important, it is found that the advertising response function is concave

An integrative framework of cooperative advertising with reference price effects

The importance of reference price effects in consumer behavior and marketing decisions is now well established in the literature. However, research on the impact of these effects on cooperative advertising decisions in marketing channels remains very limited. A two-period model is developed to analyze how members of a bilateral monopoly channel should set pricing and advertising decisions in a context where first-period price serves as the reference price of second period. By solving a Stackelberg game where the manufacturer is the leader, nine feasible equilibria are endogenously obtained. These equilibria correspond to different combinations (scenarios) of the respective decisions of the retailer and manufacturer to undertake or not and to support or not local advertising in each period. The profitability of each of these scenarios for the players and their pricing and advertising strategies over time depend, among others, on how sensitive consumers are to price changes over time

Managing advertising investments in marketing channels

This paper investigates how should manufacturers optimally allocate resources to retailer-initiated (retailer) advertising through cooperative advertising programs and own (manufacturer) advertising in a bilateral monopoly. Retailer advertising stimulates immediate sales but may also harm long-term (post-advertising) demand, whereas manufacturer advertising aims at building brand equity and stimulates both immediate and long-term sales. A game-theoretic model in which a manufacturer and a retailer set pricing and advertising decisions over a two-period planning horizon is developed to account for the differences between manufacturer and retailer advertising. We characterize equilibrium solutions for four advertising scenarios for the manufacturer, ranging from no investment in any advertising activity to undertaking own advertising and supporting retailer advertising simultaneously. Comparing the two players’ equilibrium strategies and profits across these scenarios, we find that manufacturers should avoid offering exclusively cooperative advertising programs to retailers. When retailer advertising positively influences long-term sales, manufacturers should offer cooperative advertising supports to retailers in addition to undertaking their own advertising. When retailer advertising negatively affects long-term sales, manufacturers can still undertake own advertising and offer cooperative advertising under certain conditions. However, if these conditions are not met, focusing exclusively on own advertising is their best advertising strategy. Retailers also prefer scenarios in which manufacturers advertise, but may choose not to participate in manufacturers’ cooperative advertising programs. This leads to suboptimal outcomes if cooperative advertising programs are not enhanced by additional incentives (e.g., side payments or other services).Agencia Estatal de Investigación (projects ECO2017-82227-P and PID2020-112509GB-I00)Junta de Castilla y León - Fondo Europeo de Desarrollo Regional (project VA169P20

A Generalized Fractional Program for Maximizing Content Popularity in Online Social Networks

International audienceIn this paper, we consider a "generalized" fractional program in order to solve a popularity optimization problem in which a source of contents controls the topics of her contents and the rate with which posts are sent to a time line. The objective of the source is to maximize its overall popularity in an Online Social Network (OSN). We propose an efficient algorithm that converges to the optimal solution of the Popularity maximization problem

Coordination of production and advertising decisions in a single period with a budget constraint

Cataloged from PDF version of article.In this study, we consider the production and advertising decisions in a newsboy setting with a budget constraint. Regression models that elaborate the effects of advertising on sales are investigated and various sales response models are presented. An application in soluble coffee market is also provided. Linear and power response functions are incorporated to jointly consider the production and advertising expenditures in a single period newsboy setting. Our numerical analyses indicate that production and advertising expenditure percentages are more sensitive to budget than the lost sales cost and the uncertainty (variance) of the demand.Gözek, AteşM.S

Модели экономического влияния рекламы: индивидуальные вторичные эффекты

Настоящая работа представляет собой третью часть цикла из пяти статей, посвященных обзору существующих моделей, методов и взглядов на эффекты воздействия экономического института рекламы на рынок на всех возможных уровнях. В ней рассмотрен промежуточный уровень влияния рекламы, связанный с особенностями рекламных стратегий отдельных фирм. Согласно приводимой в настоящем цикле статей классификации, эти эффекты относятся к классу индивидуальных вторичных эффектов. Отмечаются особенности кратко- и долгосрочных рекламных стратегий фирм, а также вневременные особенности поведения фирм. Показано, что классификация вторичных эффектов индивидуального уровня определяется свойствами преобладающих первичных эффектов, в зависимости от которых оптимальный вид индивидуального поведения фирмы может быть описан с помощью либо стандартной задачи производителя, дополненного рекламными инструментами, либо одной из классических моделей рекламной динамики (Видаля-Вольфа, Сетхи, Нерлова-Эрроу)

Allocazione dinamica del budget per le campagne pubblicitarie su social media

L' obiettivo di questo studio è quello di affrontare il problema di ottimizzazione di una politica dinamica di allocazione del budget per una campagna pubblicitaria diffusa attraverso un social network. Il quesito è caratterizzato da alcuni vincoli di stato finale, che rappresentano i livelli di esposizione desiderati dei segmenti di mercato, e dal tempo finale come obiettivo da minimizzare. Il modello presenta caratteristiche specifiche del social network marketing, inoltre la struttura del problema del tempo minimo è piuttosto rara nella letteratura del controllo ottimale per le applicazioni di marketing. Tramite il principio del massimo di Pontryagin si riescono ad ottenere le condizioni di ottimalità del problema e grazie all' utilizzo di funzioni di efficacia e simulazioni numeriche si riescono ad illustrare i risultati ottenuti

Waste

"If at its most elemental, the theater is an art form of human bodies in space, what becomes of the theater as suicide capitalism pushes our world into a posthuman age? Waste: Capitalism and the Dissolution of the Human in Twentieth-Century Theater traces the twentieth-century theater’s movement from dramaturgies of efficiency to dramaturgies of waste, beginning with the observation that the most salient feature of the human is her ability to be ashamed of herself, to experience herself as excess, the waster and the waste of the world. By examining theatrical representations of capitalism, war, climate change, and the permanent refugee crisis, Waste traces the ways in which these human-driven events signal a tendency toward prodigality that terminates with self-destruction. Defying its promise of abundance for all, capitalism poisons all relationships with competition and fear. The desire to dominate in war is revealed to be the desire to obliterate the self in collective conflagration. The refugee crisis raises the urgent question of our responsibility to the other, but the climate crisis renders the question of anthropocentric obligations moot. Waste proposes that the theater is the form best suited to confronting the human’s perverse relationship to its finitude. Everything about the theater is suffused with existential shame, with an acute awareness of its provisionality. Unlike the dominant narrative of the human, which is bound up with a fantasy of infinite growth, the theater is not deluded about its nature, origins, and destiny. At its best, the theater gathers artist and audience in one space to die together for a little while, to consciously waste, and not spend, their time.