A Simple Model for Determining Advertising Appropriations

Julian Lincoln Simon

11 citations0/0 files storedJournal of Marketing Research

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Consumer Market Behavior and Pricing Marketing and Advertising Strategies Merger and Competition Analysis

Abstract

This article develops a simple profit-maximizing model that requires knowledge of (a) the sales effect of advertising in the current period at different possible levels of advertising; (b) sales in the prior period; (c) the rate at which sales decline in the absence of advertising; and (d) the interest rate which is the appropriate cost of capital for the firm. This article examines the applicability of the model to general advertisers with and without monopoly power, established and new products, small and large market shares, and in oligopoly.

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References

1962Optimal Advertising Policy under Dynamic Conditions 1957An Operations-Research Study of Sales Response to Advertising 1960Business Behavior, Value and Growth.1960Early Prediction of Market Success for New Grocery Products 1965The Measurement of Cumulative Advertising Effects 1962Mathematical Models and Methods in Marketing 1976Consumer Brand Choice--A Learning Process?1955A Treatment of Distributed Lags in the Theory of Advertising Expenditure

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1989A generalization that makes useful the dorfman–steiner theorem with respect to advertising

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