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International Journal of Mathematical, Engineering and Management Sciences

ISSN: 2455-7749


Optimal Promotional Effort Policy in Innovation Diffusion Model Incorporating Dynamic Market Size in Segment Specific Market

Optimal Promotional Effort Policy in Innovation Diffusion Model Incorporating Dynamic Market Size in Segment Specific Market

Sunita Mehta
Department of Mathematics, Amity Institute of Applied Sciences, Amity University, Noida, U.P., India.

Kuldeep Chaudhary
Department of Mathematics, Amity Institute of Applied Sciences, Amity University, Noida, U.P., India.

Vijay Kumar
Department of Mathematics, Amity Institute of Applied Sciences, Amity University, Noida, U.P., India.

DOI https://doi.org/10.33889/IJMEMS.2020.5.4.055

Received on December 16, 2019
  ;
Accepted on March 15, 2020

Abstract

Due the increasing globalization of market and diverse consumer groups, market segmentation becomes an ever more important concept in current market scenario. After market segmentation, firms use the available promotional strategies to target market. In this paper, we present a model of determining the optimal dynamic promotional policies for a product in segmented market incorporating dynamic market size, where sales is assumed to be evolved through mass and differentiated promotion. Mass promotional effort is allowed in whole market with a fixed spectrum for each segment while differentiated promotion is targeted to each segment independently. The optimal promotional effort policy for each segment is obtained by applying maximum principle. Numerical illustrations are provided to show the effectiveness of the proposed method and solution procedure by discretizing the optimal control model. Furthermore, sensitivity analysis of the discount rate parameter is carried out and presented.

Keywords- Maximum principle, Dynamic potential market, Differentiated promotion, Mass promotion.

Citation

Mehta, S., Chaudhary, K., & Kumar, V. (2020). Optimal Promotional Effort Policy in Innovation Diffusion Model Incorporating Dynamic Market Size in Segment Specific Market. International Journal of Mathematical, Engineering and Management Sciences, 5(4), 682-696. https://doi.org/10.33889/IJMEMS.2020.5.4.055.

Conflict of Interest

The authors confirm that there is no conflict of interest to declare for this publication.

Acknowledgements

The authors sincerely appreciate the editor and reviewers for their time and valuable suggestions towards the improvement in the quality of the papers.

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