The Role of Customer Mind-Set Metrics in Optimal Advertising Decisions
(A2020-63170)

AUTHORS

Gokhan Yildirim, Imperial College London; Vardan Avagyan, Erasmus School of Economics; Esma Koca, Imperial College London; Shuba Srinivasan, Boston University, Questrom School of Business

KEYWORDS

mind-set ; advertising; hierarchy

ABSTRACT

Mind-set metrics such as brand awareness, consideration and liking reflect how successfully marketing activities capture customers’ “hearts and minds” and are, therefore, of paramount importance to brand managers. In this paper, we provide normative analyses that help brand managers determine ex-ante the optimal advertising spending plan that boosts financial performance through the differential impact of mind-set metrics. Empowered by optimal control theory, our work proposes optimal advertising decisions based on typical characteristics of mind-set metrics such as potential, responsiveness, cross-effects and conversion. We extend the existing literature with new propositions that elucidate the role of customer mind-set metrics in optimal advertising. We apply our analytical findings to our rich dataset and demonstrate the use of the normative tools with several managerial scenarios.