Market forecasting information and firm pricing-advertising strategies

Ruiliang Yan and Kai-Yu Wang

International Journal of Information and Decision Sciences, 2009, vol. 1, issue 4, 382-396

Abstract: The objective of this article is to investigate the optimal pricing policy and advertising strategy for firms introducing a new product into a demand uncertainty market. We develop a pricing-advertising model to investigate how the market forecasting information impacts the firm's pricing policy and advertising spending and examine how the effect of market forecasting information accuracy on the pricing policy and advertising spending is moderated by market size and price sensitivity, respectively. Our results suggest that depending on the firm's forecasting information accuracy about the market demand, forecasting information accuracy shows different value on the firm's pricing policy and advertising spending. The managerial implications of our results are discussed and probable paths of future research are identified.

Keywords: advertising strategy; forecasting; information systems; marketing research; pricing policy; new product introduction; NPI; market size; price sensitivity; market demand. (search for similar items in EconPapers)
Date: 2009
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