Gila E. Fruchter

• Professor
• Professor (Full) at Bar Ilan University

In a globalized economy, companies face a range of challenges and opportunities related to relocating production activities to a new country. Relocation can yield significant cost savings and other benefits, but there are also risks including potential damage to the brand image. Thus, firms need to carefully evaluate when to relocate and when to st...

We study optimal advertising and entry timing decisions for a new product being sold in two-segment markets in which followers are positively influenced by elites, whereas elites are either unaffected or repulsed by product popularity among followers. Key decisions in such markets are not only how much to advertise in each segment over time but als...

This paper investigates contract design by a firm in a supply chain where the quality of the product delivered to consumers is co-created by the quality decisions of the contract designer (platform firm) and the agent (the service provider) whose inputs need to be coordinated. Revenue is a function of the price charged to consumers, the product qua...

This paper introduces a model for the diffusion of add-ons that consist of new industrial technologies embedded in mature products. These new technologies are targeted to improve attributes such as the performance, convenience, safety, etc., of the carrier product that incorporates them. Although the rationale for the purchase of the carrier produc...

In this paper, we propose a new model of adoption and repurchase due to upgrades driven by the utility of technology products that keep improving. The model is able to predict product life cycle patterns that could not be explained previously. Such patterns were used to challenge diffusion theory validity. Mathematically, the model is described as...

Decentralized decision making is a fact in the modern business world accompanied by extensive research that looks into its consequences for overall firm profits. We study the interactions of decentralized marketing and operations divisions in a corporation and explore their impact on overall firm profits in the case with and without coordination of...

Relationship marketing (RM) has been a topic of serious discussions among academics and marketing practitioners for the best part of 20 years. In the 1990s it became the leading topic of discussion at academic conferences in Europe, North America, Australia and elsewhere around the globe. In this chapter we show how one can treat several problems i...

Recent studies have revealed that a celebrity's endorsement of a product or service positively influenced the purchase intention of the consumer. Such findings have created a necessity to identify the specific characteristics of celebrities that most positively influence an advertiser's target audience. This study offers an innovative model for sel...

This paper investigates the use of pricing schemes in subscription services that consist of various combinations of activation, subscription, and cancellation fees. When customers exclusively consider what is directly perceivable, the activation fee starts low and increases as the network grows (penetration strategy), whereas the cancellation fee s...

We present a model that forecasts sales and product evolution, based on data on market and industry, which can be collected before the product is introduced. Product evolution can be incremental but can also take place by releasing new generations. In our model adoption of a new product is motivated by attribute improvements (enabled by technology...

We show that the optimal advertising strategy under the Generalized Bass Model (GBM) involves beginning at an extremely low level (the lower the better) and then increasing spending throughout the planning period. This strategy remains optimal in the presence of decreasing prices that affect both margins and diffusion speed. We provide a simple exp...

Sellers often provide complimentary “no extra charge” add-ons (e.g., free Internet connection) to consumers who buy their primary products (e.g., a hotel stay), but recently add-ons that used to be free are offered for a fee. The conventional wisdom is that unadvertised add-ons for high fees help competitors increase profits that are competed away...

This paper focuses on the proactive planning of a partial switch of a prescription (Rx) drug brand to over-the-counter (OTC) status within the former's patent-protected life. The planning issues are whether and when to make this switch from the “single-status” Rx drug phase to the “dual-status” Rx+OTC phase with or without the grant of a 3-year mar...

We present a model that deals with the challenge of forecasting market acceptance and technology evolution along the product lifecycle, pre-launch. Market growth is driven by product's utility increase due to technology evolution, while firms' product improvements strategies are motivated by market growth and directed by market preferences. The int...

We present an analytic approach to address the problem of how sellers can establish and maintain a long-lasting relationship with a buyer and, at the same time, maximize customer lifetime value (CLV). To model the evolution of a relational exchange between a seller and a buyer, we extend a well-known mathematical model of “love dynamics.” The growt...

In this marketing-oriented era where manufacturers maximize profits through customer satisfac-tion, there is an increasing need to design a product line rather than a single product. By offering a product line, the manufacturer can customize his or her products to the needs of a variety of seg-ments in order to maximize profits by satisfying more c...

In this marketing-oriented era where manufacturers maximize profits through customer satisfaction, there is an increasing need to design a product line rather than a single product. By offering a product line, the manufacturer can customize his or her products to the needs of a variety of segments in order to maximize profits by satisfying more cus...

In this paper, we study the dynamic production location decisions of a manufacturer of a certain branded product. Considering brand-image as a form of goodwill, we extend the well-known Nerlove-Arrow dynamic model by adding both country-image and price. Formulating an optimal control problem for a group of countries in which the cost of production...

The relevance of transactional and relational marketing variables in relational exchanges is now well established in the marketing literature. However, the knowledge about their relative effectiveness and their optimal mix over time remains very sparse. An analytical model is proposed to help determine optimal decision rules for transactional and r...

We consider a manufacturer's dual distributions channels consisting on the one hand of a virtual (online) channel operated directly by a manufacturer and on the other hand of a real (offline) channel operated by an intermediate retailer. Customers are assumed heterogeneous in their virtual acceptance, deriving a surplus according to the channel the...

A two-part tariff is a non-linear pricing technique in which the price of a product or service is composed of two parts: an entrance fee and a charge per unit of consumption. Compared to linear pricing, this methodology leads to higher profits by allowing a firm more freedom in extracting the consumer surplus. It is widely used in telecommunication...

This study investigates how to dynamically allocate resources with a given budget for advertising through Web portals using keyword-activated banner ads on the Internet. Identifying the factors that affect the potential number of banner ad clickthroughs in each portal, we show that the process of budget allocation between the two types of portals (...

The authors propose an analytic model that deals with both behavioral considerations between exchange partners and the determination of relational marketing efforts over time. On the basis of the behavioral marketing literature, they consider three main factors that drive the levels of relational commitments between two exchange partners: the trust...

We investigate the problem of a dominant company facing entry of a “competitive fringe” (smaller competitor or fringe of smaller competitors). We seek to identify pricing and advertising (or other promotional strategies) that maximize long-term profits for the dominant firm, under possible reactions of the competitive fringe. Two main situations ar...

In many markets, competing but differentiated firms offer a product line in order to target each product to a different type of customer. Under competition, firms, while trying to target different products to different segments, are also interested in "stealing" customers from the competitors and, in particular, customers from the most profitable s...

This article examines the pricing decision of a provider of network services in the face of a growing market of customer bases that join the network and then have a demand for the service. The authors find the optimal pricing policy consisting of an ongoing membership fee and a usage price that maximizes the sum of discounted profits. Consistent wi...

We introduce a general objective function, which incorporates competitive situations, such as conservative, punitive, and predatory advertising. Linking together the particular situations into a two-parameter family of max–min problems, and using the Lanchester model to describe the dynamics of the market, a bilinear-quadratic differential game is...

The general approach to adaptive and dual control is to formulate an optimal stochastic control problem. However, for such an approach only mathematical representations of the solution are available which allow little insight into the structure of the optimal controller. Here, an alternative deterministic approach is presented based upon determinin...

This study extends the time-variant closed-loop strategy of Fruchter and Kalish (1997) to the n-player advertising game. We demonstrate that solving an n-player game using 2 players results in overadvertising.

SUMMARY This study extends the literature of dynamic advertising competition by allowing oligopoly competition and market expansion that results from advertising. We "nd how advertising actions a!ect market development and how, conversely, market development in#uences advertising policies over time. Modelling the competi- tion by a di!erential game...

This study extends the literature of dynamic advertising competition by allowing oligopoly competition and market expansion that results from advertising. We find how advertising actions affect market development and how, conversely, market development influences advertising policies over time. Modelling the competition by a differential game, we s...

In many business sectors such as airlines, hotels, trucking, and media advertising, customers' arrivals and willingness to pay are uncertain. Managers must decide whether to quote a price low enough to guarantee early sales, or to quote a higher price and risk that some units remain unsold. In allocating capacity, they face a trade-off between two...

Satisfaction Guaranteed is defined as a selling policy assuring that no consumer is worse off after purchase. The authors show that for a wide spectrum of guarantee policies, the most profitable policy is a Satisfaction Guaranteed policy. Setting a price equal to the willingness to pay of satisfied customers, but generously compensating dissatisfie...

This paper address the managerial problem of promotional budgeting and media allocation in a dynamic competitive framework. We develop an extended Lanchester model that is able to analyze multi-instrument promotion in an oligopoly. The competitors, each with a different initial position as well as economic value of the market share and communicatio...

The paper considers multiple-input multiple-output discrete systems with nonlinearities confined to sectors and with linear parts having parameter uncertainties. A recently dervied mathematical tool, the determination of zero-sets location, is used to obtain the complete feasible set of sectors of the nonlinearities which maintain robust absolute s...

Using the Lanchester model to describe the dynamics of the market where two firms compete for customers by advertising, we solve the problem of determining an optimal advertising strategy for maximum discounted profits. We develop both open- and closed-loop strategies and explain the relationship between them. Using a new mathematical approach, we...

This research analyzes the strategic use of targeted promotions for customer retention and acquisition in a dynamic and competitive environment. The normative analysis shows that a firm's optimal targeting strategies, both offensive and defensive, depend on its actual market share, the relevant redemption rate of its targeted promotions, customer p...

A recently derived mathematical model of an isolated heart is extended here to a closed-loop cardiovascular system. Taking the end-diastolic volume as state variable, the authors show that the closed-loop cardiovascular system can be described by a one-dimensional nonlinear discrete dynamical system that depends on parameters describing the systoli...

The game-theoretic approach to linear control synthesis, considering both partial and full information, is extended to include system parameter uncertainty. In the present formulation, the initial conditions are constrained to lie within given multidimensional ellipsoids. Global necessary and sufficient conditions are given for the compensator to s...

In an earlier paper by the authors in this issue (J. Math. Anal. Appl.160, 1991) various necessary conditions to determine the boundary of the zero set have been provided in a very general setting. Here, we classify and indicate which of the arsenal of conditions should be used for various classes of problems and functions for computational conveni...

We describe an analytic method for finding the location of the zero set of a vector-valued function which depends on m real variables and n complex parameters. We apply the method to robust stabilization of multivariable linear feedback systems. We find exact measures of the extent of permissible perturbations in the plant and/or the compensator th...

Using a finite-difference equation to model cardiac mechanics, we simulated the stable action of the left ventricle. This model describes the left ventricular end-diastolic volume as a function of the previous end-diastolic volume and several physiological parameters describing the mechanical properties and hemodynamic loading conditions of the hea...

We describe an analytic method for finding the location of the generalized zero set of a vector-valued function which depends on m real variables and (n + k) complex parameters. The method is applied to a robust design problem of a nonlinear Lurie type continuous-time system, with the linear part under uncertainty conditions. We find the complete f...

In this paper we propose a new model of an isolated beating heart. The model is described by a one-dimensional non-linear discrete dynamical system which depends on several parameters. Applying stability analysis we investigate the dynamic properties of the non-linear system. We find those domains in the parameter space in which the equilibrium poi...

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Given a complex-valued function f which depends on m real variables s_1,cdots,s_m and n complex parameters A_1,cdots,A_n , we describe a method of finding the zero set V of all zeros of f in some given set G in R^m when each parameter A_i is allowed to vary in some given set K_i in the extended complex plane overline{bf C} = {bf C} cup{infty} . Thi...