Advertising, product quality, and complex evolving marketing systems

On the Simple Economics of Advertising, Marketing, and Product Design

We propose a framework for analyzing transformations of the demand facing a monopolist. Our approach is based on the observation that such transformations frequently stem from changes in the dispersion of consumers’ valuations, which lead to rotations of the demand curve. In a wide variety of settings, profits are a U-shaped function of dispersion. The monopolist will adopt a mass-market postur...

Customer Directed Advertising and Product Quality

We consider a market where a single seller must employ informative advertising to launch a new product of observable quality. The monopolist may use mass, targeted or customer directed advertising. We show that the choice of advertising strategy depends on the economic properties of the advertising technology. If this exhibits strong economies of targeting, customer directed advertising arises ...

Advertising as Noisy Information about Product Quality

A firm has to make consumers aware of a new product introduction. It also has to convince them that the product is of high quality. In this paper, we consider the interplay between directly and indirectly informative advertising in a monopoly model with repeat purchase. When consumers observe the advertising expenditure, the firm may excessively advertise high quality. However, when consumers o...

Computational Advertising: A Paradigm Shift for Advertising and Marketing?

Scent Marketing: Subliminal Advertising Messages

Store chains and service providers beguile customers with a pleasant shopping atmosphere often realized by installing scent diffusers to evaporate overwhelming fragrances. Such systems named as olfactory technology are becoming a standard interior of commercial locations as well as public places and are more and more gain importance in human-computer interaction. This paper delivers insight int...