Title: Dynamic promotional allocation for multi-products in segmented market under first and repeat purchase behaviour

Authors: P.C. Jha; Prerna Manik; Anshu Gupta

Addresses: Department of Operational Research, Faculty of Mathematical Sciences, University of Delhi, Delhi-110007, India ' Department of Operational Research, Faculty of Mathematical Sciences, University of Delhi, Delhi-110007, India ' SBPPSE, Dr. B.R. Ambedkar University, Sector-9, Dwarka, Delhi-110077, India

Abstract: Promotion plays a vital role in influencing consumer behaviour in favour of the firm's offerings culminating into product trial/adoption/repurchase. Sparse promotional effort resources and shortened product life cycles require that decisions related to promotional effort allocation must be taken judiciously and objectively. In this paper, we formulate and solve an optimisation problem of promotional resource allocation for the multi products of a product line sold across distinctive market segments. The problem is formulated using a diffusion model allowing repeat purchase under budgetary and minimum sales aspiration level constraint on each product under consideration and solved using differential evolution approach. In order to allocate resources dynamically the total planning horizon is divided into multi periods. Resources are re-allocated in each period to each product under consideration in each market segment after analysing the current adoption pattern and market potential. Model applicability is shown with the help of a numerical illustration.

Keywords: promotional effort resources; promotional effort allocation; product lines; segmented markets; repeat purchases; differential evolution; multiple products; optimisation; resource allocation; diffusion modelling.

DOI: 10.1504/IJAIP.2013.054675

International Journal of Advanced Intelligence Paradigms, 2013 Vol.5 No.1/2, pp.83 - 102

Available online: 20 Jun 2013 *

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