An advertising model for hierarchically structured markets: application to the automobile industry

Abstract

In a hierarchically structured market, marketers should make use of the market structure information for developing effective marketing strategies. The authors present a Lanchester-type advertising competition model for hierarchically structured and oligopolistic markets that incorporates the market structure information. The model enables us to estimate the degree of competitive effects between brands within each submarket as well as that between submarkets. The model helps marketers allocate marketing resources to brands in a product line competing with competitors' product lines. For an empirical illustration of the model, we used advertising and market share data of the automobile industry in Korea. (C) 2002 Elsevier Inc. All rights reserved.