Consumer Learning, Brand Loyalty, and Competition
Marketing Science
Editorial: Who Is Afraid to Give Freedom of Speech to Marketing Folks?
Marketing Science
Marketing Science
Editorial: Who Is Afraid to Give Freedom of Speech to Marketing Folks?
Marketing Science
Efficiency analysis for display ads and contextual search
Proceedings of the ninth international conference on Electronic commerce
Pricing display ads and contextual ads: Competition, acquisition, and investment
Electronic Commerce Research and Applications
Integrated marketing communications in markets with uncertainty and competition
Automatica (Journal of IFAC)
Advertising Competition in a Dynamic Oligopoly with Multiple Brands
Operations Research
Optimal Advertising When Envisioning a Product-Harm Crisis
Marketing Science
Retail competition and cooperative advertising
Operations Research Letters
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To increase the sales of their products through advertising, firms must integrate their brand-advertising strategy for capturing market share from competitors and their generic-advertising strategy for increasing primary demand for the category. This paper examines whether, when, and how much brand advertising versus generic advertising should be done. Using differential game theory, optimal advertising decisions are obtained for a dynamic duopoly with symmetric or asymmetric competitors. We show how advertising depends on the cost and effectiveness of each type of advertising for each firm, the allocation of market expansion benefits, and the profit margins determined endogenously from price competition. We find that generic advertising is proportionally more important in the short term and that there are free-riding effects leading to suboptimal industry expenditure on generic advertising that worsen as firms become more symmetric. Due to free-riding by the weaker firm, its instantaneous profit and market share can actually be higher. The effectiveness of generic advertising and the allocation of its benefits, however, have little effect on the long-run market shares, which are determined by brand-advertising effectiveness. Extensions of the model show that market potential saturation leads to a decline in generic advertising over time.