Offensive versus defensive marketing: What is the optimal spending allocation?

Optimal double control problem for a PDE model of goodwill dynamics

“…The offensive marketing u 0 is identified with every marketing activity that attracts new consumers. Similar to Martín-Herrán et al (2012) we define the defensive marketing strategy u as all marketing activities which are focused on retaining existing consumers and fostering brand loyalty. Both marketing strategies make a distinction between the consumers with different usage experience.…”

Manufacturer defensive and offensive advertising in competing distribution channels

“…For instance, Martín‐Herrán et al. () report findings that support the view that a firm may find it optimal to exclusively undertake either one of the two types of advertising or combine the two at the same moment over time. However, this body of research overlooks critical aspects considered in this study, including the role of retailers, pricing decisions, and customer preferences in advertising competition.…”

“…This conventional knowledge remains however very generic and cannot serve as a practical framework for advertising targeting, especially in a competitive context. A few analytical works have investigated directly or indirectly advertising targeting in various contexts (e.g., Erickson, 1993;Iyer et al, 2005;Wang et al, 2011, Martín-Herrán et al, 2012Zhang et al 2016). For instance, in a duopoly market, Iyer et al (2005) found that advertising targeting that focuses on consumers whose preference match a product's attribute is more effective than a uniform advertising run across segments.…”

“…However, many of these previous works do not offer advertisers the possibility to use differentiated advertising programs to target different market segments. Some exceptions include the works by Erickson (1993), Martín-Herrán et al (2012), and Martín-Herrán and Sigué (2019), which allow competitors, in a market share rivalry, to use offensive and defensive advertising to, respectively, attack the rival's market share and defend their own market share. Comparing the outcomes of advertising targeting in a single market segment to the outcomes of running the same advertising in the whole market when consumers have different brand preferences may lead to suboptimal advertising strategies (e.g., Iyer et al, 2005).…”

“…There are a few consumers, in between, who can purchase either brand, but their role is negligible. Building on Erickson (1993), Martín-Herrán et al (2012), and Martín-Herrán and Sigué (2019), we consider that manufacturers in the two channels have the possibility of undertaking two differentiated advertising programs targeted to these two market segments. Advertising targeted to own customer base is called defensive advertising as it stimulates demand from consumers who naturally prefer the brand and, by so doing, limits the effects of any advertising assault from the rival.…”