An Analytical Advertising Model Approach to the Determination of Market Demand

Abstract

The dynamic nature of decision-making in business enterprise simulations depends on the computation of aggregate market demand. The aggregate demand models in simulations are essentially based on the economic model of an oligopoly industry. Despite the mathematical rigor in which the models of market demand are incorporated in business simulations, these models in many aspects are gross over simplifications of the real world. The major weakness of the aggregate market demand model in business enterprise simulations is the simplistic treatment of the advertising decision. This paper presents a proposed demand model, which places primary importance on marketing concepts.