Offensive and Defensive Marketing: Closed-Loop Duopoly Strategies

A modified Lanchester game is used to develop closed-loop strategies for offensive and defensive marketing expenditures of duopolistic competitors in a market share rivalry. Analysis of the model reveals that • well-defined closed-loop strategies can be developed that show directly the influence of market share on offensive and defensive marketing; • steady state is marked by balance between offensive and defensive marketing expenditures; • defensive marketing is more critical than offensive marketing due to greater risk of loss under deviation from closed-loop strategies. The last result would appear to have particularly important implications for both practice and research.