Advertising mode of duopoly competitive enterprises based on asymmetric cost efficiency and converter preference

Abstract

This study focuses on two types of online advertising: mass advertising and targeted advertising. First, models for equilibrium pricing and profit influencing decisions are constructed based on asymmetric cost efficiency and converter preference. Second, game theory is used to analyze two scenarios: competitive enterprises participating simultaneously in both mass advertising and targeted advertising, and only one enterprise participating in targeted advertising. The main research findings are as follows: 1) Between the two advertising modes, enterprises can realize Pareto optimization more easily when engaging in targeted advertising. 2) In terms of cost efficiency, enterprises with low cost efficiency are more likely to obtain more benefits by participating in targeted advertising. 3) As far as the preference of the converter is concerned, generally speaking, with the increase in converter preference, enterprises with converter advantages will obtain more (or the same) profits than others. 4) Both average price and high price strategy are more sensitive to advertising costs than the preference of the converter. The conclusions of this study provide a theoretical basis for enterprises to advertise and the corresponding best methods.