The Role of Customer Mindset Metrics in Optimal Advertising Decisions

Abstract
Customer mindset metrics such as brand awareness, consideration and liking reflect how successfully marketing activities such as advertising capture customers’ “hearts and minds”. Using data on such metrics, brand managers need to make optimal advertising decisions and improve their financial outcomes. Drawing on both analytical and empirical modelling approaches, this research is the first to examine the role of customer mindset metrics in optimal advertising decisions. Empowered by optimal control theory, our work derives optimal advertising spending trajectories that depend on how advertising influences mindset metrics (sequentially vs. simultaneously) and on the typical characteristics of these metrics. We apply our model as a managerial decision-making tool for a dataset in fast moving consumer goods brand in shaving category and derive empirical insights. Our research informs brand managers how to make optimal advertising decisions based on mindset metrics effectiveness criteria such as potential, stickiness, responsiveness and conversion. Our paper also provides a managerial decision-making tool that supports managers in calculating the contribution of each mindset metric to optimal profits.

Keywords – Mindset metrics, optimal advertising, hierarchy of effects, dynamic optimization.

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