The objective of a firm is to use market segmentation in promotion of a product to yield competitive advantages over its competitors. Market segmentation provides an opportunity to plan effective promotional policies in target market. In this paper, we use the concept of market segmentation in innovation-diffusion model for promotion of a new product under the influences goodwill of firm that also generates additional sales. We discuss evolution of sales under the assumption that practitioner uses mass and differentiated promotional effort for each segment and efforts vary from segment to segment. Here, we formulate an optimal control problem and obtain optimal promotional effort policy for proposed problem using maximum principle
Optimal promotional policy for a new product in presence of firm’s goodwill in Segmented Market: A control theoretic Approach
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