Abstract
In today’s highly competitive business environment, advertisement plays an influential role in attracting customers and increasing market share. Companies adopt different advertising strategies in a competitive market, such as offensive, defensive, and generic, to keep and increase their market share. Researchers have generally modeled this problem using a dynamic differential game. All previous research studies have focused on finding these strategies in a duopoly market. Also, to simultaneously determine the optimal equilibrium strategy for these three strategies, the model is designed as a symmetric game due to the ease of solving. In contrast with the previous researches, the purpose of this paper is to present and solve an asymmetric game model to determine the optimal offensive, defensive, and generic advertising strategies in an oligopoly market. The proposed model’s objective is to obtain the maximum equilibrium profit for each company at any moment regarding the market share of each company and those of competitors. A numerical solution method based on the Pontryagin’s maximum principle is developed to solve the model. Then, the proposed model is solved for a triopoly market. Also, the sensitivity of the results to changes in model parameters has been investigated. The obtained results denote that in markets with more than two players under the asymmetric game, the proposed model can prescribe the optimal type of offensive, defensive, and generic advertising strategies.
Highlights
Marketing managers generally try to spend their budget optimally and with maximum effectiveness to strengthen their company’s competitive position [1, 2]
A Lanchester advertising model is developed in which companies find their offensive, defensive, and generic equilibrium advertising strategies in an asymmetric oligopolistic advertising competition
Previous research focusing on modeling offensive, defensive, and generic advertising strategies has been modeled in a symmetric duopoly game, in reality, most advertising competitions are oligopoly and asymmetric. e proposed model is solved numerically in a triopoly market based on the hypothetical values of the parameters and the changes of different parameters are evaluated on the strategies of each company
Summary
Marketing managers generally try to spend their budget optimally and with maximum effectiveness to strengthen their company’s competitive position [1, 2] In this regard, one of the challenges facing marketing managers is changes in marketing strategies and the market share of different competitors over time [3,4,5]. To keep and increase the market share, these companies have adopted a different type of defensive, offensive, and generic advertising strategy. According to the mentioned research gap, the purpose of this paper is to present and solve a model that explains the advertising competition between more than two players in an asymmetric dynamic advertising differential game by considering offensive, defensive, and generic advertising strategies.
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