Optimal Allocation of Space in Retail Advertisements and Mail-order Catalogues: Theory and a First-approximation Decision Rule

The problem of allocating space to different products in a mail-order catalogue or retail advertisement is often bedevilled by the absence of information about the ‘space elasticity of demand’. Usually, all that is known are sales figures from previous catalogues and advertisements. Under these conditions, where marginal analysis is impractical, the authors recommend a simple first-approximation decision rule.