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A key task of advertising media planners is to determine the best media schedule of advertising exposures for a certain budget. Conceptually, the planner could choose to do continuous advertising (i.e., schedule ad exposures evenly over all weeks) or follow a strategy of pulsing (i.e., advertise in some weeks of the year and not at other times). Previous theoretical analyses have shown that continuous advertising is optimal for nearly all situations. However, pulsing schedules are very common in practice. Either the practice of pulsing is inappropriate or extant models have not adequately conceptualized the effects of advertising spending over time. This paper offers a model that shows pulsing strategies can generate greater total awareness than the continuous advertising when the effectiveness of advertisement (i.e., ad quality) varies over time. Specifically, ad quality declines because of advertising wearout during periods of continuous advertising and it restores, due to forgetting effects, during periods of no advertising. Such dynamics make it worth-while for advertisers to stop advertising when ad quality becomes very low and wait for ad quality to restore before starting the next “burst” again, as is common in practice. Based on the extensive behavioral research on advertising repetition and advertising wearout, we extend the classical Nerlove and Arrow (1962) model by incorporating the notions of repetition wearout, copy wearout, and ad quality restoration. is a result of excessive frequency because ad viewers perceive that there is nothing new to be gained from processing the ad, they withdraw their attention, or they become unmotivated to react to advertising information. refers to the decline in ad quality due to passage of time independent of the level of frequency. is the enhancement of ad quality during media hiatus as a consequence of viewers forgetting the details of the advertised messages, thus making ads appear “like new” when reintroduced later. The proposed model has the property that, when wearout effects are present, a strategy of pulsing is superior to continuous advertising even when the advertising response function is concave. This is illustrated by a numerical example that compares the total awareness generated by a single concentrated pulse of varying duration (blitz schedules) and continuous advertising (the even schedule). This property can be explained by the tension between the pressure to spend the fixed media budget quickly to avoid copy wearout and the opposing pressure to spread out the media spending over time to mitigate repetition wearout. The proposed model is empirically tested by using brand-level data from two advertising awareness tracking studies that also include the actual spending schedules. The first data set is for a major cereal brand, while the other is for a brand of milk chocolate. Such advertising tracking studies are now a common and popular means for evaluating advertising effectiveness in many markets (e.g., Millward Brown, MarketMind). In the empirical ...

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Category management (CM) is a recent retail management initiative that aims at improving a retailer's overall performance in a product category through more coordinated buying, merchandising, and pricing of the brands in the category than in the past. Despite tremendous retailer and manufacturer interest in the process of CM and its rapid adoption in the industry, much uncertainty exists about the consequences of CM for channel members. The present study focuses on how a shift to CM by a retailer affects its equilibrium prices, sales, and profitability in a competitive retail setting. On the basis of an analysis of a model of two competing national brand manufacturers that supply two competing common retailers, the authors find that one retailer's adoption of CM increases its average unit price of the category and reduces its sales volume and revenues. However, this retailer can still enjoy an increase in its gross margin profits as competing manufacturers' wholesale prices fall in the process. Also, the CM adopter's profits are greater than those of a symmetric competing retailer that follows the traditional brand-centered management of a product category when the interbrand competition is high but interstore competition is low. Applying the intervention analysis methodology, the authors empirically test several of these analytical findings, employing a unique data set that contains information about a supermarket chain's weekly average unit prices and sales of the laundry detergent category before and after this product category was moved to CM by the retailer. The propositions that adoption of CM will lead to higher retail prices and lower sales are upheld in this empirical study. The authors discuss the implications of these findings for practitioners and researchers, the limitations of the study, and directions for further research.