Advertising Media Strategies and Product Line Design in Vertically Differentiated Market

• Main Authors: Yi-Ling Lin, 林怡伶
• Other Authors: 周善瑜
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/56650827507060656728

碩士 === 國立臺灣大學 === 商學研究所 === 94 === We analyze the optimal advertising media strategies and product line design for a monopoly in a vertically differentiated market. We build a game-theoretic model where a monopoly chooses advertising media before setting the price(s) for its product(s). Our results show that the optimal media strategy depends not only on the reach rates of different media and the extent of different media overlapping with each other in reaching each segment but also on the size of each segment. In particular, the following results are obtained. First, when the valuation of consumers in the low-end segment also increases with product quality, the monopoly with the product of higher quality will have higher incentives to serve more consumers and thus to adopt uniform advertising strategy. Second, the introduction of competition will increase the likelihood that the monopoly chooses targeted advertising. Finally, compared with the case under perfect information, the monopoly under imperfect information may expand into the low-end market, change its target market(s), or gives up either the high-end or the low-end market.