Optimal double control problem for a PDE model of goodwill dynamics

DOI10.1007/S00186-017-0577-1MaRDI QIDQ2407988zbMATH OpenOpenAlexDBLPWikidataFDO

Authors Mariusz Górajski, Dominika Machowska

Publication date 9 October 2017

Published in Mathematical Methods of Operations Research (Search for Journal in Brave)

Copyright license Creative Commons Attribution 4.0 International

Full work available at URL https://arxiv.org/abs/1411.0880, http://link.springer.com/10.1007/s00186-017-0577-1

zbMATH Keywords

eWOMnonlinear Lotka-Sharp-McKendrick equationoptimal boundary controlproduct goodwill

Mathematics Subject Classification ID

Existence theories for optimal control problems involving partial differential equations (49J20) Optimality conditions for problems involving partial differential equations (49K20) Numerical methods based on necessary conditions (49M05) Marketing, advertising (90B60) Welfare economics (91B15) Microeconomic theory (price theory and economic markets) (91B24) Trade models (91B60)

Abstract: We propose a new optimal model of product goodwill in a segmented market where the state variable is described by a partial differential equation of the Lotka--Sharp--McKendrick type. In order to maximize the sum of discounted profits over a finite time horizon, we control the advertising efforts which influence the state equation and the boundary condition. Moreover, we introduce the mathematical representation of consumer recommendations in a segmented market. Based on the semigroup approach, we prove the existence and uniqueness of optimal controls. Using a maximum principle, we construct a numerical algorithm to find the optimal solution. Finally, we examine several simulations on the optimal goodwill model and discover two types of advertising strategies.

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Cited in

(12)

• Closed-loop Nash equilibrium for a partial differential game with application to competitive personalized advertising
• An optimal control model with defective products and goodwill damages
• Competition in defensive and offensive advertising strategies in a segmented market
• Delayed effects of cooperative advertising in goodwill dynamics
• Optimal control of the customer dynamics based on marketing policy
• The effects of technological shocks in an optimal goodwill model with a random product life cycle
• How do loyalty programs affect goodwill? An optimal control approach
• A model for the marketing of a seasonal product with different goodwills for consumer and retailer
• Optimal pricing and promotional effort control policies for a new product growth in segmented market
• A finite element method for elliptic optimal control problem in the unbounded domain
• Consumer heterogeneity and the price-quality relationship
• A singular control model with application to the goodwill problem

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• bvp4c

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