Investigation on the Impact of Product Design and Advertising on the Repeated Purchase Behaviors

While the repeated purchase patterns are very common for the various non-durable good items, the most past studies on the product designing have focused on only the first time purchasing. This study examines how the product design and advertising affect the repeated purchase behaviors. In the proposed mathematical model, the repeated purchasing is represented as the special demand pattern, which is affected by consumers’ past experiences in some specific types of product features. Meanwhile, the seller can attract the trial purchase by enhancing the portrayal product features or advertising the product. The proposed mathematical model generates the optimal decisions on designing product features and advertising, which maximize the sellerʼs profit. In order to investigate the impact of the several environmental factors on the sellerʼs profit and figure out the specific patterns of the optimal decisions on the enhancement in product design and advertising under various conditions, this study analyzes the numerical examples with the different initial market shares, costs, and market share changes. The results of the analyses show that the seller should increase the enhancement in product designing and advertising and made the most of it at the beginning, if the condition is relatively favorable. Under the situation of lower unit cost or higher market change related to the experience -based product features, however, the seller needs to increase the level of the enhancement in both portrayal and experience-based product features, and the heavy enhancement should be delayed later. These results provide useful managerial implications for the seller who manufactures and sells the products with the repeated purchase demand pattern