publication . Article . 1983

Optimal Advertising with Stochastic Demand

George E. Monahan;
Open Access
  • Published: 01 Jan 1983 Journal: Management Science, volume 29, issue 1 January, pages 106-117
Abstract
A stochastic, sequential model is developed to determine optimal advertising expenditures as a function of product maturity and past advertising. Random demand for the product depends upon an aggregate measure of current and past advertising called "goodwill," and the position of the product in its life cycle measured by sales-to-date. Conditions on the parameters of the model are established that insure that it is optimal to advertise less as the product matures. Additional characteristics of the optimal advertising policy are also established.
Subjects
free text keywords: optimal advertising, Markov decision process, Management Science and Operations Research, Strategy and Management, Advertising, Random demand, Economics, Sequential model, Microeconomics, Markov decision process, Goodwill
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publication . Article . 1983

Optimal Advertising with Stochastic Demand

George E. Monahan;