An Optimum Geographical Distribution of Publicity Expenditure in a Private Organization

Summary

The problem is: Given an international organization with branches in n different countries and concerned with publicity for a commodity X—in competition with a substitute X’—how should such an organization allocate its expenditure among them so as to get the maximum overall return. First, the general form of a curve representing response to advertising in favor of one commodity only is developed. Response is defined as the increase in the consumption of X above its natural level, by which is meant the consumption of X that would exist if there were no promotion for either X or X’. It is assumed that inter-country differences in response depend on the following parameters: population, relative publicity and other costs, per caput consumption of (X + X’)/ and a psychological factor θ (which measures the “X-mindedness” of the population); these are introduced into the general equation of the response curve. Allowance is also made for a time-lag in the effects of promotion. The “interaction” effect of simultaneous publicity in favor of both X and X’ is then considered and a formula is developed for the resultant response R in this case.