Optimal Advertising Policies for Diffusion Models of New Product Innovation in Monopolistic Situations

Engelbert Dockner and Steffen Jørgensen
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Steffen Jørgensen: Institute of Theoretical Statistics, Copenhagen School of Economics and Business Administration, Julius Thomsens Plads 10, DK-1925 Frederiksberg C, Denmark

Management Science, 1988, vol. 34, issue 1, 119-130

Abstract: This paper deals with the determination of optimal advertising strategies for new product diffusion models. We consider the introduction of a new consumer durable in a monopolistic market and the evolution of sales is modelled by a flexible diffusion model. Repeat sales and possible entry of rivals are disregarded but we allow for discounting of future revenue streams and cost learning curve. Using standard methods of optimal control theory we characterize qualitatively the structure of an optimal advertising strategy for different versions of the diffusion model.

Keywords: marketing; marketing: advertising; marketing: new products (search for similar items in EconPapers)
Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:34:y:1988:i:1:p:119-130

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