Integrated Marketing Communications in Markets with Uncertainty and Competition

Automatica, Vol. 45, pp. 601-610, 2009

37 Pages Posted: 28 Jan 2007 Last revised: 25 Sep 2010

See all articles by Ashutosh Prasad

Ashutosh Prasad

University of California, Riverside (UCR)

Suresh Sethi

University of Texas at Dallas - Naveen Jindal School of Management

Date Written: 2009

Abstract

Firms frequently utilize multiple communications instruments as part of their marketing campaign. Interactions between these instruments suggest that firms should apply Integrated Marketing Communications (IMC) to benefit from the synergies. We review different IMC models and then present a stochastic IMC model for which explicit closed-loop solutions of the optimal advertising and market share are obtained. This enables us to understand the role of firm and market parameters, such as synergy, on the optimal advertising budget and allocation. For the proposed and existing IMC models we show that the budget and allocation decisions can be made independently, greatly simplifying the implementation of IMC. We also show that there is an optimal long-run market share that the firm should try to maintain through appropriate use of IMC. Finally, the model and results are generalized to multiple (>2) instruments and multiple competitors.

Keywords: Advertising, Dynamics, Budgeting, Integrated Marketing Communications, Decisions under Uncertainty, Dynamic Optimization

JEL Classification: M31, M37, C61, C73, M00, C7, M3, C72

Suggested Citation

Prasad, Ashutosh and Sethi, Suresh, Integrated Marketing Communications in Markets with Uncertainty and Competition (2009). Automatica, Vol. 45, pp. 601-610, 2009, Available at SSRN: https://ssrn.com/abstract=959740

Ashutosh Prasad

University of California, Riverside (UCR)

900 University Avenue
Riverside, CA 92521
United States

Suresh Sethi (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

800 W. Campbell Road, SM30
Richardson, TX 75080-3021
United States

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