1. ¹National Cheng Kung University, Tainan, Taiwan, ROC
2. ²Southern Taiwan University of Technology, Tainan, Taiwan, ROC

Correspondence: C Lin, Department of Industrial and Information Management, Institute of Information Management, National Cheng Kung University, Tainan, Taiwan 70101, ROC. E-mail: linn@mail.ncku.edu.tw

Received May 2006; Accepted December 2006; Published online 28 February 2007.

Abstract

There are few studies that provide a useful tool or model to determine the promotion duration during the transition state of customers' switching between different brands. This implies that marketing managers usually decide the promotion duration based on their past experiences. The study integrates the Markov chain, entropy, and diffusion theory to model the problem and find a solution. Furthermore, the Taguchi method is also used to capture the uncertain parameters of the model to solve the problem. A numerical example is used to illustrate how the model determines optimal promotion duration.