Integration of development and advertising strategies for multi-attribute products under competition

Yingchen Yan, Qiuhong Zhao, Zhongfeng Qin and Gaoji Sun

European Journal of Operational Research, 2022, vol. 300, issue 2, 490-503

Abstract: In recent years, an increasing number of competing firms have started to integrate their product attribute development and advertising strategies by targeted advertising of the best-developed attribute of their product. With a focus on such integration and its potential effects, we establish an analytical model in which two competing firms sell multi-attribute products. Each firm can choose which attribute to focus on in its development strategy and which attribute to emphasize in its advertising strategy. By optimizing the development and advertising strategies of these firms, we first verify the integration of these two strategies as each firm advertises only its developed attribute. Second, we find that advertising, according to the firms’ development choices, plays distinctive roles on profit generation: the difference-alleviating or difference-strengthening effect. Therefore, when determined endogenously, the advertising intensities show qualitatively different changing trends: a monotonous curve in the same-attribute-development case but an inverted-U shaped curve in the different-attribute-development case. Third, we find advertising establishes a connection between firms’ attribute development choices, making them depending not only on their own development cost. A smaller difference between the development costs of these firms or a higher advertising efficiency increases the firms’ willingness to develop a same attribute. We also extend our analysis to the flexible quality level of the non-developed attribute, asymmetric substitution degrees between attributes and prices, or the endogenous attribute development levels, and study how the interactions between the product development and advertising are affected. This paper highlights the importance of making development and advertising strategies jointly.

Keywords: Supply chain management; Product development; Multi-attribute product; Advertising; Price competition (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221721006639
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:300:y:2022:i:2:p:490-503

DOI: 10.1016/j.ejor.2021.07.053

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().