Market Response Models

The purpose of this master thesis is to provide a general up-to-date overview of current approaches and methods in the field of market response models, with the main emphasis on advertising and its dynamics as determining factors. We will guide the reader through this topic by presenting several distinct approaches, and will on our way use methods from several mathematical fields, including Econometrics, Operations Research, Control Theory and Game Theory, to name the most important. It is this variety of available approaches that we try to subsume into one overall picture in this work, and accordingly to bridge the gap that currently seems to exist between these in marketing literature. This thesis has a strong theoretical bias, and will only present a few databased findings, which already have appeared in other publications, along the way. Though the target audience definitely also includes advertising practitioners, who are looking for framework and guidance to better understand, respectively model their markets and its dynamics. Additionally we devote a complete chapter to the optimality of pulsing policies (respectively to the ’optimal distribution of advertising expenditures over time’), provide an extensive historical overview on this subject in literature, and finally present the latest standings which try to identify the key characteristics within a market which lead to pulsation.