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

Guiomar Martín-Herrán, Shaun McQuitty, Simon Pierre Sigué

    Research output: Contribution to journalJournal Articlepeer-review

    28 Citations (Scopus)

    Abstract

    This article investigates the optimal spending allocation between offensive and defensive marketing in a dynamic, mature market when two firms are competing for market share. A modified Lanchester model is used to determine Nash stationary feedback strategies that allow the competitors to adjust their marketing expenditures as their market shares evolve over time. The interaction between offensive and defensive marketing activities is an important component of the model. Previous studies have not considered this variable. Our findings suggest that a cost differential between offensive and defensive marketing cannot fully explain resource allocation in a competitive market. Instead, optimal allocation largely depends on the firms' relative positions in the market, their competitive advantages in offensive and defensive marketing, and the costs and effectiveness of these two classes of marketing activities. This article discusses the theoretical and managerial implications.

    Original languageEnglish
    Pages (from-to)210-219
    Number of pages10
    JournalInternational Journal of Research in Marketing
    Volume29
    Issue number2
    DOIs
    Publication statusPublished - Jun. 2012

    Keywords

    • Customer acquisition
    • Customer retention
    • Defensive marketing
    • Lanchester model
    • Offensive marketing

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