TY - JOUR
T1 - Offensive versus defensive marketing
T2 - What is the optimal spending allocation?
AU - Martín-Herrán, Guiomar
AU - McQuitty, Shaun
AU - Sigué, Simon Pierre
N1 - Funding Information:
The first author's research was partly supported by MICINN and JCYL under projects ECO2008-01551 and VA001A10-1 and was co-financed by FEDER funds. The last two authors' research was supported by Athabasca University . We thank two anonymous reviewers, an associate editor, and the editor, Professor M.G. Dekimpe, for their helpful comments.
PY - 2012/6
Y1 - 2012/6
N2 - 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.
AB - 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.
KW - Customer acquisition
KW - Customer retention
KW - Defensive marketing
KW - Lanchester model
KW - Offensive marketing
UR - http://www.scopus.com/inward/record.url?scp=84862188970&partnerID=8YFLogxK
U2 - 10.1016/j.ijresmar.2011.10.003
DO - 10.1016/j.ijresmar.2011.10.003
M3 - Journal Article
AN - SCOPUS:84862188970
SN - 0167-8116
VL - 29
SP - 210
EP - 219
JO - International Journal of Research in Marketing
JF - International Journal of Research in Marketing
IS - 2
ER -