A Dynamic Model for Competitive Marketing in Coupled Markets

Abstract

A dynamic model is developed for competitive marketing situations involving products whose markets are coupled. By coupling it is meant that advertising dollars spent in generating sales for one product have an influence on the sales of another product. A game-theory approach is taken, and noncooperative equilibrium solutions for advertising expenditures are developed. Effectiveness is measured by weighted future profits. Various aspects of model building for coupled markets are discussed. The present dynamic model treats any number of competitors and products. It thus extends previous work by the author on a two competitor, two product, static model for coupled markets.