Trade-off between two advertising strategies: coverage or penetration
by Tian Wang; Ding Zhang
International Journal of Networking and Virtual Organisations (IJNVO), Vol. 26, No. 3, 2022

Abstract: There are two different basic advertising strategies, namely, enlarging the market coverage and improving the market penetration. Efforts in the first (coverage) strategy can be seen as handing out leaflets, advertising board and huge-crowd acquisition. Efforts in the second (penetration) strategy can be seen as improving product quality, service environment and positive word-of-mouth. Which one is more efficient, coverage or penetration? How do firm trade-off between the two advertising strategies? By establishing two-stage models, this paper explores the optimal advertising levels for the two strategies, respectively. After that, this paper compares the optimal profits under the two strategies in various market settings and finds the more efficient advertising strategy. Management insights are generated for decision-makings of firm managers.

Online publication date: Fri, 13-May-2022

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