Study Of Optimal Decision-Making In Pricing And Promotion

Due to the deepening innovation and opening and the speedy development of socialist market economy in our country, firms strengthen their sense of scientifically operating. When solving various marketing-related decision-making problems, optimization theories and tools on decision-making are needed. Focusing on such practical needs, this paper attempts to study a variety of decision-making optimization problems in pricing and promotion, and to get some implications that give guideline to marketing management.In marketing, the decision-makings in pricing, advertising budget, and promotion blend are some parts of the important decisions the firms are concerned with. Many researchers studied these decision problems. However, there are still some problems to be studied further yet. Moreover, some new problems in this field emerged in recent years. With the focus on those existing problems that need further research and the new problems that occurred, in this paper some innovations are made along the following dimensions:1. The optimal pricing for various brands within product category in monopoly with one stage. In the study of this problem, a general nonlinear programming model is proposed, and the nonlinear programming theories and neural network methods are adopted to analyze and solve the model. Furthermore, an example is illustrated.2. The dynamic optimal pricing for two competitive products under diffusion. In the study of this problem, on the basis of Generalized Bass Model a competitive diffusion model is presented, based on which a dynamic optimal pricing model for two competing products is built by using optimal control theory. The differentiate game is applied to analyze the model and some results are obtained. Moreover, the application steps of the dynamic optimal pricing model to the practice are described, and an example is given.3. The optimal advertising for various brands within product category in monopoly with one stage. In the study of this problem, an optimal advertising model for various brands is built by using nonlinear programming theory. The model is transformed into a standard quadratic one. Then a feasible solvifig solution is proposed. A numerical example is given, and the example is derived by Matlab programming tools. The presented optimization method used in advertising decision considers the competition among various brands so that it facilitates the optimal allocation of limited advertising budgets, and provides a profit-maximization advertising budget strategy to firms.4. The dynamic optimal advertising model for diffusion product in monopoly. In the study of this problem, by considering the dynamics of new product's advertising and its diffusion effect, a dynamic optimal advertising model in the framework of GBM is established. The model is analyzed and derived through using the optimal control theory. Some analytical results are obtained to reveal some properties of the optimal advertising strategies. Moreover, the application steps are demonstrated.5. The dynamic optimal advertising model under stochastic condition. In the study of this problem, to model the situation that the sales response to the advertising expenditure varies randomly, a multi-stage dynamic advertising model under stochastic condition is presented. Withthe help of Markov decision process theory the model is analyzed, and some analytical results are obtained. Moreover, the dynamic advertising strategy in a special case is addressed, and an example is provided.6. The promotion blend decision on the basis of consumer behavior. In the study of this problem, the impacts of promotion tools on consumer behavior are formulated, and an integrated consumer behavior model is built by using semi-Markov process theory. The model integrates brand choice, purchasing incidence, and purchasing quantity. Some results are derived from the model, which can be used in market analysis. To be related to integrated marketing, the result is applied to the promotion blend decision.7. The promotion blend decision considering the persi...