Can advertising help to maintain dynamic market equilibrium?

Macarena Estévez
MindShare, Spain

INTRODUCTION

A system is a unit with an identity that distinguishes it from the rest of the environment, being made up of a set of elements that interact with each other, influencing each other in such a way as to be working towards a common goal.

Bearing in mind the above definition, we can understand a market as a system where each product offered in that market is an element of the system, the common goal being the maximization of sales (or share) for every product within the market.

System dynamics shows how the system is changing through time. These changes are going to be caused by the variations of the different elements of the system, as a consequence of the interactions among them (endogenous variables), or also for the possible effect of a given variable whose evolution were independent from the rest of the system but which could affect the system (exogenous variables).