Dynamic Models of Advertising Competition: Open- and Closed-Loop Extensions (International Series in Quantitative Marketing)

The use of advertising by competing firms to achieve and maintain profitable market positions is an important subject of scholarly research and practical relevance. This book reviews previous empirical and analytical research on advertising competition and extends this research in an analytical direction -- by deriving closed-loop (perfect) advertising strategies and comparing them to open-loop strategies -- for duopolistic situations. Three types of models -- Lancaster, Vidale-Wolfe, and diffusion -- are investigated and steady-state analysis shows distinct differences between closed-loop and open-loop strategies. Finally, empirical research is identified to sort out what type of advertising strategy is used by competitors and a methodology is advanced, and empirical propositions are offered, to encourage research in the direction of empirical validation.