Abstract
This paper considers a specific marketing problem based on a model by Gould (1970). The extension is that we have two kinds of advertising directed towards new customers and existing customers, respectively. We found that history dependent behavior occurs: if initial goodwill is small then it does not pay to spend a lot of money on advertising towards existing customers. Consequently convergence to a saddle point with low goodwill prevails where there is only advertising with the aim to attract new customers. On the other hand, for larger initial goodwill, eventually a steady state with a high goodwill level is reached where both types of advertising are used.
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© 2005 Springer
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Hartl, R.F., Kort, P.M. (2005). Advertising Directed Towards Existing and New Customers. In: Deissenberg, C., Hartl, R.F. (eds) Optimal Control and Dynamic Games. Advances in Computational Management Science, vol 7. Springer, Boston, MA. https://doi.org/10.1007/0-387-25805-1_1
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DOI: https://doi.org/10.1007/0-387-25805-1_1
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