Abstract
Advertising has always been an important way for companies to promote their products and carry out product publicity. With the advent of the information age and the convenience of the Internet, the spread and dissemination of advertising are becoming widespread. There are two different basic advertising strategies, namely expanding market coverage and increasing market penetration. Expanding market coverage is a common advertising strategy for company managers. Through this strategy, they focus on the size of the market. Increasing market penetration is another way to increase demand. Company managers focus on the current market, but gain and maintain greater penetration by improving the quality of products or services. The first (coverage) strategy can be seen as distributing flyers, advertising boards and mass acquisitions. The efforts of the second (penetration) strategy can be seen as improving product quality, service environment and positive reputation. Which one is more effective, coverage or penetration? Under what conditions is it better for the company manager? These problems have not been found in the literature. By establishing a two-stage model, this article discusses the optimal advertising levels of these two strategies. Specifically, this article compares the optimal profits of the two strategies in various market environments and finds more effective advertising strategies. Management insights are generated for decision-making of firm managers.
Recommended Citation
Wang, Tian and Zhang, Ding, "Trade-off Between Two Advertising Strategies: Coverage or Penetration" (2020). WHICEB 2020 Proceedings. 13.
https://aisel.aisnet.org/whiceb2020/13