Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/238023 
Year of Publication: 
2021
Series/Report no.: 
23rd Biennial Conference of the International Telecommunications Society (ITS): "Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world", Online Conference / Gothenburg, Sweden, 21st-23rd June, 2021
Publisher: 
International Telecommunications Society (ITS), Calgary
Abstract: 
We develop an advertising strategy for durable goods firms applying a dual time-period model while considering three-stage game in a Cournot competition. We assume that firms employ two advertising approaches; one is online advertising, which escalates consumers' willingness to purchase goods and the other is conventional mass media advertising, including television and radio, which presents a limited 'evoked set' of goods. The term evoked set implies that consumers only consider a small group of brands prior to making a purchase. As firms understand the character of each advertisement, sales strategy is devised to target a heterogeneous consumer through advertising. Should firms only choose one type of advertisement or a combination of the two kinds of ads available? In this model we assume that firms directly consider both types of advertising. Our analysis demonstrates that online advertisement raises the total number of consumer-product matches in the competitive equilibrium. We also show that firms combine the two types of advertisement to apply the differing effects of each format. Moreover, firms increase revenue through an appropriate mix of advertising strategy, although the cost of advertising might increase. Regarding the future direction of advertising, we anticipate that the combination of both online and conventional strategies will persist, maintaining the growth of a diverse product market.
Subjects: 
Durable goods
Online media advertising
mass media advertising
targeting
media strategy
JEL: 
D15
D43
L13
D82
Document Type: 
Conference Paper

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