Advertising Strategies in Electronic Retailing: A Differential Games Approach

DSpace/Manakin Repository

Advertising Strategies in Electronic Retailing: A Differential Games Approach

Show full item record

Title: Advertising Strategies in Electronic Retailing: A Differential Games Approach
Author(s):
Liu, Dengpan;
Kumar, Subodha;
Mookerjee, Vijay S.
Format: text
Item Type: article
Keywords: Electronic data processing
Game theory
Information technology
Marketing
Abstract: We consider advertising problems under an information technology (IT) capacity constraint encountered by electronic retailers in a duopolistic setting. There is a considerable amount of literature on advertising games between firms, yet introducing an IT capacity constraint fundamentally changes this problem. In the presence of information processing constraints, although advertising may still cause a customer to switch, it may not result in a sale, i.e., the customer may be lost by both firms. This situation could occur when customers have a limited tolerance for processing delays and leave the website of a firm because of slow response. In such situations, attracting more traffic to a firm's site (by increasing advertising expenditure) may not generate enough additional revenue to warrant this expenditure. We use a differential game formulation to obtain closed-form solutions for the advertising effort over time in the presence of IT capacity constraints. Based on these solutions, we present several useful managerial insights.
ISSN: 1047-7047
Persistent Link: http://dx.doi.org/10.1287/isre.1110.0377
http://hdl.handle.net/10735.1/3201
Terms of Use: © 2012 INFORMS

Files in this item

Files Size Format View
SOM-FR-Mookerjee-310573.83.pdf 351.0Kb PDF View/Open

This item appears in the following Collection(s)


Show full item record