This article aims at exploring how the monopolist determines the optimal allocation of advertising and pricing when he faces the threat of the potential firm entering the market. When consumers are unable to distinguish the quality of a commodity, they will use the weighted average willingness to pay of the high quality and the low quality goods to be the willingness to pay for the commodity. Because that the average willingness to pay is different among consumers of different types, thus the monopolist¡¦s decisions concerning the allocation of advertising budget and pricing will be influenced. We found that no matter what the average willingness to pay is, as long as the monopolist has the ability to compete against price, the expenditure on advertising will be larger; otherwise, the expenditure on advertising will be smaller.

The aim of the paper is to investigate how the dual brand of firm decides its optimal allocation of advertising and fundamental strategy of marketing under taking account of markets with multi-consumption externalities. We assume that the market is multi-consumption externalities, and advertising may function as a device to coordinate consumer expectations of the purchasing decisions of other consumers, which is different from the past assumption that consumer type is single and role of advertising in market. Therefore, we reexamine the firm with optimal allocation of advertising. Finally, we show that the firm will adapt different pricing, allocation of advertising and strategy of marketing when facing the different consumer type of combination proportion. If market is dissimilar consumption externalities, above statement will be more significant; On the contrary, if firm facing similar consumption externalities, the optimal is single strategy. In other words, it is independent to consumer's type of combination proportion.