Optimization of Advertising Resources over Time: A Strategic Analysis

AMS subject classification: 90B60, 90B50, 90A80.

Strategic behaviour has long been a crucial issue for modern corporations. To maximize potential profits and market share, firms are more than willing to invest in sales promotion to boost long term manufacturing output. Knowing that the sales of the firm not only respond to own advertising budgets, but also depend upon rivals’ advertising strategies, oligopolistic firms form part, therefore of a continuous race with reference to non-price competition. Efficient use of investment resources is crucial for business operations and long term strategic success. This paper aims to investigate the key issue of optimization of strategic advertising outlays. By using mathematical modelling techniques, strategic linkages between rival companies are identified and advertising impacts explained. Since advertising influences can persist through time, our discussion extends to explore this fundamental point by constructing a more advanced model to examine into the problems of optimization over time. Empirical data is used to test the predictive power of these models and assess relative efficiencies. All in all, this paper intends to highlight the importance of continuous strategic advertising investment and consequently provides comprehensive insights into the impact of modern advertising functions over time.