Evaluation of advertising pulsation whth marketing-production joint decision making

Abstract

In marketing, the pulsing policy is known to be an optimal advertising policy when the wearout effect of advertising exists or the S-shaped sales response curve holds. This thesis examines the following two questions ; i ) Will the pulsing policy be still optimal policy when the production and marketing decisions are made simultaneously? ii ) If not, under what kind of cost structure the pulsing policy fails to be optimal? In this regard, two integrated models are developed for the joint production and marketing decisions which explicitly consider the effect of advertising pulsation on forecasted sales data. The total cost of production decisions is composed of the regular payroll cost, the hiring/firing cost of workers, the overtime charge and the inventory cost. We perform computational evaluation of the models with various values of price and cost parameters. It is shown that the pulsing policy may not be an optimal policy under certain price-cost structures. Also, cost factors and/or cost ratios are identified which affect the performance of the advertising pulsation.