[1] Zou Xiang, Zhong Weijun, Mei Shue,. Imperfect targeted advertising with two-period competition [J]. Journal of Southeast University (English Edition), 2014, 30 (3): 374-379. [doi:10.3969/j.issn.1003-7985.2014.03.022]

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Journal of Southeast University (English Edition)[ISSN:1003-7985/CN:32-1325/N]

Volumn:

30

Issue:

2014 3

Page:

374-379

Research Field:

Economy and Management

Publishing date:

2014-09-30

Info

Title:

Imperfect targeted advertising with two-period competition

Author(s):

Zou Xiang;  Zhong Weijun;  Mei Shu’e

School of Economics and Management, Southeast University, Nanjing 211189, China

Keywords:

targeted advertising;  imperfect targeting;  price discrimination;  two-period game

PACS:

F270.5

DOI:

10.3969/j.issn.1003-7985.2014.03.022

Abstract:

A two-period model is developed to investigate the competitive effects of targeted advertising with imperfect targeting in a duopolistic market. In the first period, two firms compete in price in order to recognize customers. In the second period, targeted advertising plays an informative role and acts as a price discrimination device. The firms’ optimal advertising and pricing strategies under imperfect targeting are compared with those under perfect targeting. Equilibrium decisions show that, under imperfect targeting, when the advertising cost is low enough, both firms will choose to target ads at the rivals’ old segments. This equilibrium, which could not exist under perfect targeting, results in two opposite results. When cost is high, the effect of mis-targeting will soften price competition and increase profits; on the contrary, when cost is low enough, it will lead to aggressive price competition and profit loss with the increase of imperfect targeting, so firms may have incentives to reduce the mis-targeting degree.

References:

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Memo

Memo:

Biographies: Zou Xiang(1986—), female, graduate; Zhong Weijun(corresponding author), male, doctor, professor, zhongweijun@seu.edu.cn.
Foundation item: The National Natural Science Foundation of China(No.71371050).
Citation: Zou Xiang, Zhong Weijun, Mei Shu’e. Imperfect targeted advertising with two-period competition[J].Journal of Southeast University(English Edition), 2014, 30(3):374-379.[doi:10.3969/j.issn.1003-7985.2014.03.022]

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