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- Title
ADVERTISING EXPENDITURE TRAJECTORIES: AN EMPIRICAL STUDY FOR FILTER CIGARETTES.
- Authors
Turner, Ronald E; Wiginton, John C
- Abstract
In an advertising strategy, it is preferable to optimize a sequence of periodic decisions, rather than optimizing each period's decision separately. Thus, a dynamic technique such as optimal control, which is used in this study, should be employed. Necessary conditions, as inferred from a parsimonious advertising model, are tested using data from the tobacco industry. Parameter estimation involves the use of non-linear regression. The estimates permit trajectories of optimal advertising expenditures and optimal market shares to be constructed for filter cigarettes. When compared with the actual trajectories, the optimizing trajectories exhibit a striking correspondence to reality. Therefore, interesting results can be obtained using a simple model, provided the optimizing method takes into account the dynamic nature of managerial decision-making and provided powerful methods for estimating model parameters are used.
- Subjects
DECISION making; ESTIMATION theory; FEASIBILITY studies; MULTIVARIATE analysis; PROBLEM solving; STATISTICAL decision making
- Publication
Decision Sciences, 1976, Vol 7, Issue 1, p496
- ISSN
0011-7315
- Publication type
Article
- DOI
10.1111/j.1540-5915.1976.tb00695.x