This paper presents a review of recent developments that have taken place in the area of dynamic optimal control models in advertising subsequent to the comprehensive survey of the literature by Sethi in 1977. The basic problem underlying these models is that of determining optimal advertising expenditures and possibly other variables of interest over time for a firm or a group of competing firms under consideration. This optimization is done subject to some dynamics that define how these variables translate into sales and in turn, into profits. The purpose of this update is twofold. On the one hand, new contributions in the areas already treated in the earlier survey are reviewed. On the other hand, new trends in the advertising literature since 1977, such as quality as an additional marketing instrument, cumulative sales models, pulsing advertising, and advertising as a part of corporate models of the firm, are discussed. The models covered in this update are organized under six headings: models with ca...

Dynamic optimal control models in advertising: recent developments

Considering a simple production system, this paper presents an alternative method based on system dynamics for solving economic and managerial optimal control problems. Such an approach can be helpful in cases where the application of the mathematical optimal control theory is impossible or too laborious for planners or decision makers.

Markku Touminen

Papers

An advertising control model of two state variables