Advertisement

The Impact of Advertising in Emergent Economic Context: A System Dynamics Simulation Approach

  • Cuauhtémoc Sánchez Ramírez
  • Guillermo Cortés Robles
  • Giner Alor Hernández
Part of the Studies in Computational Intelligence book series (SCI, volume 484)

Abstract

The continual changes in the current market have increased complexity in business strategies. Under such dynamic conditions, enterprises need new tools, methods and methodologies to deal with uncertainty, ambiguity and a huge number of interactions. This phenomenon presents important differences in emergent economies but also similarities: the success of a product in the market will depend on product design, an efficient supply chain and also upon the right advertising campaigns in order to improve profit. In parallel, enterprises in emerging economies are involved in a global business where it is necessary to consider the challenging conditions for better decision-making. System dynamics simulation is a tool that can helps enterprises to analyze and observe the effect of business strategies over global performance. Marketing and advertising considered as a business strategy is not an exception to this statement. Thus, in this article is described a methodology and a study case where system dynamics simulation helps a motorcycle distributor enterprise to assess the impact of their advertising strategies in the market share, in order to chose the most suitable strategy through a sensitivity analysis.

Keywords

Advertising System Dynamics Emergent Economy Marketing Simulation 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Abdel-Hamid, T.K.: The Dynamics of Software Development Project Management: An Integrative System Dynamics Perspective. PhD Thesis, Sloan School of Management, MIT, Cambridge, MA (1984)Google Scholar
  2. 2.
    AMA- American Marketing Association, definition of marketing, http://www.marketingpower.com/_layouts/Dictionary.aspx?dLetter=M#marketing+management (consulted in August 2012)
  3. 3.
    Angerhofer, B., Angelides, M.: System dynamics modeling in supply chain management: Research review. In: Proceedings of the 2000 Winter Simulation Conference (2000)Google Scholar
  4. 4.
    Besiou, M., Stapleton, O., Wassenhove, L.: System dynamics for humanitarian operations. Journal of Humanitarian Logistics and Supply Chain Management 1(1), 78–103 (2011)CrossRefGoogle Scholar
  5. 5.
    Brian, F.: Analytical System Dynamics. Springer (2009)Google Scholar
  6. 6.
    Carayannis, E., Campbell, D.: Editorial preface to the first volume of Journal of Innovation and Entrepreneurship. Journal of Innovation and Entrepreneurship 1(1) (2012), doi:10.1186/2192-5372-1-1Google Scholar
  7. 7.
    Chan, S., Ip, W., Cho, V.: A model for predicting customer value from perspectives of product attractiveness and marketing strategy. Expert System with Applications 37(2), 1207–1215 (2010)CrossRefGoogle Scholar
  8. 8.
    Colomo-Palacios, R., García-Crespo, A., Gómez-Berbís, J.M., Paniagua-Martín, F.: A Case of System Dynamics Education in Software Engineering Courses. IEEE Multidisciplinary Engineering Education Magazine 3(2), 52–59 (2008)Google Scholar
  9. 9.
    Dill, M.: Capital Investment Cycles: A System Dynamics Modeling Approach to Social Theory Development. Paper read at 15th International System Dynamics Conference: "Systems Approach to Learning and Education into the 21st Century", Istanbul, Turkey (1997)Google Scholar
  10. 10.
    Farris, P., Bendle, N., Pfeifer, P., Reibstein, D.: Marketing Metrics. The definitive guide to measuring marketing performance, 2nd edn. Pearson Educations Inc. (2010)Google Scholar
  11. 11.
    Ford, A., Lorber, H.W.: Methodology for the Analysis of the Impacts of Electric Power Production in the West. Paper read at Environmental Protection Agency Conference on Energy/Environment II (1977)Google Scholar
  12. 12.
    Forrester, J.: Industrial Dynamics. Productivity Press, Portland (1961)Google Scholar
  13. 13.
    Forrester, J., Senge, P.: Test for Building Confidence in System Dynamics Models. TIMS Studies in the Management Science 14, 209–228 (1980)Google Scholar
  14. 14.
    Galanakis, K.: Innovation process. Make sense using systems thinking. Technovation 26(11), 1222–1232 (2006)Google Scholar
  15. 15.
    Georgiadis, P., Vlachos, D., Iakovou, E.: A system dynamics modeling framework for the strategic supply chain management of food chain. Journal of Food Engineering (70), 351–364 (2005)Google Scholar
  16. 16.
    Gröβler, A., Schieritz, N.: Of stocks, flows, agents and rules strategic simulation in supply chain research. Research methodologies in supply chain management, pp. 445–460. Editorial Physica-Verlang (2005)Google Scholar
  17. 17.
    Größler, A., Löpsinger, T., Stotz, M., Wörner, H.: Analyzing price and product strategies with a comprehensive system dynamics model—A case study from the capital goods industry. Journal of Business Research 61(11), 1136–1142 (2008)CrossRefGoogle Scholar
  18. 18.
    Hansen, J.E., Bie, P.: Distribution of body fluids, plasma protein, and sodium in dogs: a system dynamics model. System Dynamics Review 3(2), 116–135 (1987)CrossRefGoogle Scholar
  19. 19.
    Herfel, W., Gao, Y., Rodrígues, D.: Chinese Medicine and Complex Systems Dynamics. Philosophy of Complex Systems 1, 675–719 (2011)CrossRefGoogle Scholar
  20. 20.
    Homer, J.B., Clair, C.L.: A Model of HIV Transmission through Needle Sharing. A model useful in analyzing public policies, such as a needle cleaning campaign. Interfaces 21(3), 26–29 (1991)Google Scholar
  21. 21.
    Huang, J., Leng, M., Liang, L.: Recent developments in dynamic advertising research. European Journal of Operational Research 220(3), 591–609 (2012)MathSciNetMATHCrossRefGoogle Scholar
  22. 22.
    Kahen, G., Lehman, M., Ramil, P., Wernick, P.: System dynamics modeling of software evolution processes for policy investigation: Approach and example. Journal of Systems and Software 59(3), 271–281 (2001)CrossRefGoogle Scholar
  23. 23.
    Kleijnen, J.: Sensitivity Analysis and Optimization of System Dynamics Models: Regression Analysis and Statistical Design of Experiments. System Dynamics Review 11(4), 275–288 (1995)CrossRefGoogle Scholar
  24. 24.
    Leeflang, P., Wittink, D.: Building models for marketing decisions: Past, present and future. International Journal of Research in Marketing 17(2-3), 105–126 (2000)CrossRefGoogle Scholar
  25. 25.
    Little, J.: Aggregate Advertising Models, The State of the Art. Operation Research 27, 629–667 (1979)MATHCrossRefGoogle Scholar
  26. 26.
    Mosekilde, E., Larsen, E.R., Sterman, J.D.: Coping with Complexity: Deterministic Chaos in Human Decision making Behavior. In: Casti, J.L., Karlqvist, A. (eds.) Beyond Belief: Randomness, Prediction, and Explanation in Science. CRC Press, Boston (1991)Google Scholar
  27. 27.
    Nicholson, C., Kaiser, H.: Dynamic market impacts of generic dairy advertising. Journal of Business Research 61(11), 1125–1135 (2008)CrossRefGoogle Scholar
  28. 28.
    Otto, P.: A system dynamics model as a decision aid in evaluating and communicating complex market entry strategies. Journal of Business Research 61(11), 1173–1181 (2008)MathSciNetCrossRefGoogle Scholar
  29. 29.
    Papachristos, G.: A system dynamics model of socio-technical regime transitions. Environmental Innovation and Societal Transitions 1(2), 202–233 (2011)CrossRefGoogle Scholar
  30. 30.
    Qi, C., Chang, N.B.: System dynamics modeling for municipal water demand estimation in an urban region under uncertain economic impacts. Journal of Enviroment Management, 1628–1641 (2011)Google Scholar
  31. 31.
    Richardson, G., Otto, P.: Applications of system dynamics in marketing: Editorial. Journal of Business Research 61(11), 1099–1101 (2008)CrossRefGoogle Scholar
  32. 32.
    Sakao, T., Lindahl, M.: Introduction to Product/Service-System Design. Springer (2010)Google Scholar
  33. 33.
    Sánchez, C., Cedillo, M.G., Villanueva, P., Martínez, J.: Global economic crisis and Mexican automotive suppliers: impacts on the labor capital. Simulation 87(8), 711–725 (2011)CrossRefGoogle Scholar
  34. 34.
    Sheth, J., Sisodia, R.S.: Marketing productivity: issues and analysis. Journal of Business Research 55(5), 349–362 (2002)CrossRefGoogle Scholar
  35. 35.
    Sterman, J.: Business dynamics: Systems thinking and modeling for a complex world. McGraw-Hill, Irwin (2000)Google Scholar
  36. 36.
    Suryani, E., Chou, S., Chen, C.H.: Air passenger demand forecasting and passenger terminal capacity expansion: A system dynamics framework. Expert Systems with Applications 37, 2324–2339 (2010)CrossRefGoogle Scholar
  37. 37.
    Varey, R.: Marketing as an Interaction System. Australasian Marketing Journal 16(1), 79–94 (2008)CrossRefGoogle Scholar
  38. 38.
    Vidale, M.L., Wolfe, H.B.: An operation research study for the response to advertising. Operation Research 5, 370–381 (1957)MathSciNetCrossRefGoogle Scholar
  39. 39.
    Wierenga, B., Ophuis, P.: Marketing decision support systems: Adoption, use, and satisfaction. International Journal of Marketing Research 14(3), 275–290 (1997)CrossRefGoogle Scholar
  40. 40.
    Yim, N., Kil, S., Kim, H., Kwahk, K.: Knowledge based decision making on higher level strategic concerns: system dynamics approach. Expert System with Applications 27(1), 143–158 (2004)CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  • Cuauhtémoc Sánchez Ramírez
    • 1
  • Guillermo Cortés Robles
    • 1
  • Giner Alor Hernández
    • 1
  1. 1.Postgraduate DepartmentInstituto Tecnológico de OrizabaOrizaba VeracruzMéxico

Personalised recommendations