A model of targeted advertising with customer recognition

A two-period duopoly model is developed to examine the competitive effects of targeted advertising with customer recognition （TACR）. In the model, two competing firms sell goods to end consumers in the first period, during which customer recognition is obtained. In the second period, advertising can be targeted toward different consumer types. Advertising is assumed to be persuasive in the way that consumer valuation is increased. Equilibrium decisions and profits in each period are derived, showing that the firm who loses the current competition will win in the future. As a result, forward-looking firms price less aggressively so that their long-term profits can be enhanced with the help of TACR. Particularly, TACR improves profits through three important effects： valuation increasing, customer poaching, and anti-competition. Finally, this paper investigates the welfare issues, showing that firms enhance profits at the expense of consumer surplus. It is, therefore, suggested that public sectors take a step to protect consumers with the rapid development of targeting technology.

Optimal targeted advertising strategies based on consumers' value attributes

To evaluate the effects of consumers＇ value attributes on a firm＇s marketing strategies with targeted advertising, each consumer＇s value is measured according to the consumer＇s consuming behavior and consumption features. The baseline model in which a firm sends targeted advertising to myopic consumers with constant valuations is established. The results showthat, when a firm sells products to consumers with distinct values using the strategies of targeted advertising and discriminative price, the firm＇s equilibrium profit with targeted advertising may not always be higher than that using mass advertising, which depends on the ratio of high-value and low-value consumers. Then, three extension models are constructed.First, the firm sends targeted advertising to consumers with different targeting precisions. Secondly, the firm invests in the targeting precision of targeted advertising. Finally, the deliberation cost of rational consumers accepting the discriminative price and targeted advertising is considered. The results indicate that it is profitable for a firm to send targeted advertising to consumers with different value attributes.

Imperfect targeted advertising with two-period competition

A two-period model is developed to investigate the competitive effects of targeted advertising with imperfect targeting in a duopolistic market. In the first period, two firms compete in price in order to recognize customers. In the second period, targeted advertising plays an informative role and acts as a price discrimination device. The firms＇ optimal advertising and pricing strategies under imperfect targeting are compared with those under perfect targeting. Equilibrium decisions show that, under imperfect targeting, when the advertising cost is low enough, both firms will choose to target ads at the rivals＇ old segments. This equilibrium, which could not exist under perfect targeting, results in two opposite results. When cost is high, the effect of mis-targeting will soften price competition and increase profits; on the contrary, when cost is low enough, it will lead to aggressive price competition and profit loss with the increase of imperfect targeting, so firms may have incentives to reduce the mis- targeting degree.

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Beijing Tourist Map (Chinese and English) A handy guide to getting around the city, the content of Beijing Tourist Map is regularly updated. Information will be in line with changes to public transportation in Beijing, including the Beijing Urban Map, Beijing Subway System layout and Beijing Suburban Scenic Spots. The map also shows the exact locations of

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Beijing Tourist Map (Chinese and English) A handy guide to getting around the city, the content of Beijing Tourist Map is regularly updated. Information will be in line with changes to public transportation in Beijinq, including the Beijing Urban Map, Beijing Subway System lay- out and Beijing Suburban Scenic Spots. The map also shows the exact locations of Beijinq city scenic spots, food and entertainment venues special streets and shopping areas.

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Beijing Tourist Map (Chinese and English) A handy guide to getting around the city, the content of Beijing Tourist Map is regularly updated. Information will be in line with changes to public transportation in Beijing, including the Beijing Urban Map, Beijing Subway System layout and Beijing Suburban Scenic Spots. The map also shows the exact locations of