Path Dependencies and the Long-term Effects of Routinized Marketing Decisions

Content Provider	Semantic Scholar
Author	Darden, Paul Farris Verbeke, W.
Copyright Year	2002
Abstract	The purpose of this paper is to discuss a simulation of marketing budgeting rules that is based on a simplified version of the market share attraction model. The budgeting rules are roughly equivalent to those that may be used in practice. The simulation illustrates the concept of path dependence in dynamic marketing systems and shows how it might result from decision rules potentially applied by marketers and retailers. Path dependence results from positive feedback in dynamic systems that imparts momentum to market choices. Where the potential for path dependence exists, there are implications for defining and measuring long-term effects of marketing decisions in a way that is meaningful to managers and researchers. In the simulations presented we show that limited retail assortments may contribute to path dependence when firms use either percentage-of-revenue rules or “market learning” experiments to set budgets. While other budgeting procedures (e.g., matching competition) may stabilize market share, this stability in the share dimension comes at the cost of instability for budgets and profits.
File Format	PDF HTM / HTML
Language	English
Access Restriction	Open
Subject Keyword	Budgets Choice Behavior Dynamical system Experiment Instability NIST hash function competition Path dependence Positive feedback Rule (guideline) Simulation
Content Type	Text
Resource Type	Article