Technical Note—The Generalized Sethi Advertising Model

Adrian P. Kennedy (), Suresh P. Sethi (), Chi Chung Siu () and Sheung Chi Phillip Yam ()
Additional contact information
Adrian P. Kennedy: Department of Statistics, The Chinese University of Hong Kong, Shatin, Hong Kong
Suresh P. Sethi: Naveen Jindal School of Management, The University of Texas at Dallas, Richardson, Texas 75080
Chi Chung Siu: Department of Mathematics, Statistics and Insurance, School of Decision Sciences, The Hang Seng University of Hong Kong, Shatin, Hong Kong
Sheung Chi Phillip Yam: Department of Statistics, The Chinese University of Hong Kong, Shatin, Hong Kong

Operations Research, 2024, vol. 72, issue 4, 1526-1535

Abstract: We propose a flexible yet tractable dynamic advertising model called the generalized Sethi model to capture different market penetration rates across various media and markets via advertising. Specifically, the generalized Sethi model employs a Cobb–Douglas production function of advertising expenditure and the untapped market share with constant returns to scale. It encompasses some standard dynamic advertising models as particular cases. Moreover, the model’s flexibility does not compromise its tractability. We demonstrate it by showing single- and multifirm advertising problems involving Nash and Stackelberg games to admit closed-form expressions for the firms’ optimal advertising strategies and value functions under the generalized model. Sensitivity analysis of the model parameters also yields novel economic insights regarding the firms’ optimal advertising strategies and value functions.

Keywords: Market Analytics and Revenue Management; advertising policy; dynamic sales-advertising model; Sethi advertising model; Nash equilibrium; Stackelberg equilibrium (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/opre.2021.0717 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:72:y:2024:i:4:p:1526-1535

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().