Consumption experience and sales promotion expenditure

Article Abstract:

An empirical and theoretical analysis of consumption of brand-labeled goods in an equilibrium market, in which consumer information is primarily dependent upon advertising, sales promotional efforts and previous consumer experience, indicates that brands that enjoy relatively high consumption rates have lower expenditures on advertising, spend less on advertising and sales promotion combined, and emphasize advertising, rather than sales promotion, when promoting consumption. Proofs of these three propositions are offered, after subjecting them to empirical testing based on data released by the profit impact of marketing study (PIMS) project. Sales promotional efforts for brands with low consumption rates can transform the brand into a challenger for the popular brand, and can make the lesser consumed brand a temporary brand of choice, on a trial basis.

Marketing, Marketing models, Advertising campaigns, Sales promotions, Consumers

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The dynamics of prices and market shares over the product life cycle

Article Abstract:

When analyzing the effects of competition on pricing policy and market shares, the duopoly model presented demonstrates that price setting as a function of time will create initially declining prices that increase later in the product life cycle. The duopoly model presented also indicates that market share of the larger company will initially increase, only to decrease later, and that company growth may maximize early in the product life cycle, although such growth cannot be maximized late in such cycles. Moreover, the duopoly model presented substantiates theories that only the lower-priced products will be associated with informative advertising efforts, while both higher and lower priced products will require persuasive advertising.

Product life cycle, Market share

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A special case of dynamic pricing policy

Article Abstract:

Using some of the existing studies on the indications of brand loyalty and experience curves for dynamic pricing policies with open-loop equilibria, a continuous time model is developed, demonstrating that under conditions of elevated discount rates and higher exogenous declines in variable costs, prices should drop over time. When consumers are brand loyal and experience curves influence fixed costs, prices should rise over time. The model, its assumptions and notation, and the applied analysis, are described. Additional areas of dynamic pricing research are also identified.

Research, Brand choice, Microeconomics

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