Competitive advertising interference arises when viewers of advertising for a focal brand are also exposed to advertising messages for competing brands within a short time period, say one week for TV advertising. Although competitive advertising interference has been shown to reduce ad recall and recognition and brand evaluation measures, no studies have examined the impact on sales. In this research we use a market response model of sales for two grocery categories in the Chicago area to investigate possible advertising interference effects. The results show that competitive interference effects are strong. When one or more competing brands advertise in the same week as the focal brand, the advertising elasticity diminishes for the focal brand. The rate of decrease depends on the number of competing brands advertising in a particular week and their total GRPs broadcast. We are able to derive optimal advertising levels for the brands within a category so that they all have the maximum sales response from advertising. It transpires that the current level of television advertising within the two categories is much higher than this optimum level, indicating that these grocery brands are likely to be over advertising at present. Curtailing advertising for all the brands would increase the response to advertising for each of them.2
Researchers have recently been interested in studying the drivers of store-brand success as well as factors that motivate retailers to introduce store brands. In this paper, we study the effects of the introduction of a store-brand into a particular product category. Specifically, we are interested in the effect of store-brand introduction on the demand as well as on the supply side. On the demand side, we investigate the changes in preferences for the national brands and price elasticities in the category. On the supply side, we study the effects of the new entrant on the interactions between the national brand manufacturers and the retailer introducing the store brand, including how these interactions influence the retailer's pricing behavior. In doing so, we are also able to test whether the observed data are consistent with some of the commonly used assumptions regarding retailer pricing behavior. For the demand specification we use a random coefficients logit model that allows for consumer heterogeneity. The model parameters are estimated using aggregate data while explicitly accounting for endogeneity in retail prices. Our empirical results obtained from the oats product category based on store-level data from a multistore retail chain indicate that the store-brand introduction generates notable changes within the category. The store-brand introduction coincides with an increase in the retailer's margins for the national brand. We find that the preferences for the national brand are relatively unaffected by the introduction of the store-brand. While consumers are, in general, more price sensitive (in terms of elasticities) than they were prior to store-brand introduction, a statistical test of the differences in mean price elasticities across stores and between the two regimes fails to reject the hypothesis of no change in these elasticities. Elasticities in specific stores however, do increase after the store brand is introduced. We also find that there is considerable heterogeneity in the preferences for the store-brand. On the supply side, we test several forms of manufacturer-retailer interactions to identify retailer pricing behavior most consistent with the data. Our results indicate that the data reject several, commonly imposed, forms of interactions. In examining the nature of manufacturer interactions with the retailer, we find that the manufacturer of the national brand appears to take a softer stance in its interactions with the retailer subsequent to store-brand entry. This finding is consistent with academic research and with articles in the popular press which suggest that the store brand enhances the retailer's bargaining ability vis-à-vis the manufacturers of the national brands. We also provide results from a second product category frozen pasta) that are largely consistent with those found in the oats category.retailer pricing, store brands, manufacturer-retailer interactions
This study examines the impact of brand quality on three components of shareholder wealth: stock returns, systematic risk, and idiosyncratic risk. The study finds that brand quality enhances shareholder wealth insofar as unanticipated changes in brand quality are positively associated with stock returns and negatively related to changes in idiosyncratic risk. However, unanticipated changes in brand quality can also erode shareholder wealth because they have a positive association with changes in systematic risk. The study introduces a contingency theory view to the marketing-finance interface by analyzing the moderating role of two factors that are widely followed by investors. The results show an unanticipated increase (decrease) in current-period earnings enhances (depletes) the positive impact of unanticipated changes in brand quality on stock returns and mitigates (enhances) their deleterious effects on changes in systematic risk. Similarly, brand quality is more valuable for firms facing increasing competition (i.e., unanticipated decreases in industry concentration). The results are robust to endogeneity concerns and across alternative models. The authors conclude by discussing the nuanced implications of their findings for shareholder wealth, reporting brand quality to investors, and its use in employee evaluation. for comments on earlier versions of the article. The authors also thank the Emory Marketing Institute and Harris Interactive for access to some of the data, and the Institute for Services Excellence at the Singapore Management University (ISES) for funding this project. Study Key FindingBrand Quality and Consumer Choice Steenkamp, Batra, and Alden (2003) Perceived brand quality is positively related to purchase likelihood. Erdem, Swait, and Valenzuela (2006) Across seven countries, perceived brand quality has a strong positive impact on consumer intentions to purchase a brand. Swait and Erdem (2007) Perceived brand quality is a strong determinant of whether a brand is even in the consideration set of the customer. Brand Quality and PriceDhar and Hoch (1997) Consumers price sensitivity matters less for high-quality brands. Randall, Ulrich, and Reibstein (1998) Perceived brand quality allows a brand to command significant price premiums. Sullivan (1998) Consumers pay higher prices for high-quality brands even though the production platform of the car might be the same. Erdem, Keane, and Sun (2008) Perceived brand quality is positively related to price and frequent price cuts lower perceived brand quality. Dubé et al. (2008) Higher perceived brand quality yields greater long-term profitability from consumer loyalty. This is because over the long run, loyal consumers will pay more for the higher-quality brands. Brand Quality and Marketing InitiativesAllenby and Rossi (1991) Price promotions are more effective for high-quality brands. Sivakumar and Raj (1997) Brands with high perceived quality derive greater benefits from price promotions in terms of consumer decision to purchase from a category an...
We develop a testing methodology that can be used to predict the performance of e-mail marketing campaigns in real time. We propose a split-hazard model that makes use of a time transformation (a concept we call virtual time) to allow for the estimation of straightforward parametric hazard functions and generate early predictions of an individual campaign's performance (as measured by open and click propensities). We apply this pretesting methodology to 25 e-mail campaigns and find that the method is able to produce in an hour and fifteen minutes estimates that are more accurate and more reliable than those that the traditional method (doubling time) produces after 14 hours. Other benefits of our method are that we make testing independent of the time of day and we produce meaningful confidence intervals. Thus, our methodology can be used not only for testing purposes, but also for live monitoring. The testing procedure is coupled with a formal decision theoretic framework to generate a sequential testing procedure useful for the real time evaluation of campaigns.database marketing, e-mail, pretesting, advertising campaigns
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