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Marketing as Diffusion in a Single Population
Author(s) -
Ralston Bruce A.
Publication year - 1979
Publication title -
geographical analysis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 65
eISSN - 1538-4632
pISSN - 0016-7363
DOI - 10.1111/j.1538-4632.1979.tb00684.x
Subject(s) - profit (economics) , market size , economics , monotonic function , steady state (chemistry) , population , microeconomics , market price , mathematics , commerce , mathematical analysis , chemistry , demography , sociology
The paper examines the optimal advertising policy for a profit‐maximizing firm in a single market area. The results are first derived for a spaceless market, indicating the steady‐state equilibrium advertising policy and market size. The model is then extended to account for the costs of overcoming distance. It is shown that there is an outward limit to marketing, and that this distance is dependent on the market price and retirement rate of the good and the interest rate. The minimal price necessary for covering any given distance is derived, along with the minimal advertising effort necessary to reach the steady‐state market size. It is shown that the steady‐state market size, advertising policy, and switching time are all monotonic functions of distance.