Price and advertising based information forecast in direct market

Abstract

The focus of this paper is information forecast value and the profound impact it has in today's market. When a firm sells its new product through the direct market, the accuracy of marketing forecast information plays important impact on price and advertising spending, and thus expected profits. We develop a price-advertising model to see how the effect of marketing forecast information on the price and advertising spending, and expected profit are moderated by product quality, product acceptance of a direct market, and the customers' preference, respectively. Research results suggest that forecast information precision is more valuable when product quality is high and product acceptance of a direct market is large. It also suggest that the customers' preference does not affect the value of information at all.