Advertising in a segmented market: comparison of media choices

Segmentation is a core strategy in modern marketing but, to the best of our knowledge, it is not considered in most dynamic advertising models. In this paper, we aim to fill such a gap by presenting a dynamic advertising model which includes market segmentation. First, we model goodwill evolution in a segmented market under the assumption that the decision maker may independently choose the advertising intensity directed at each different segment. Then, we assume that the decision maker must use a single medium, which reaches several segments with different effectiveness. We obtain the explicit solutions of the relevant optimal control problems. These results permit us to compare the two different contexts and to obtain a preference index for advertising media.