Does competitive entry structurally change key marketing metrics?

To what extent does competitive entry create a structural change in key marketing metrics? New players may just be a temporal nuisance to incumbents, but could also fundamentally change the latter's performance evolution, or induce them to permanently alter their spending levels and/or pricing decisions. Similarly, the addition of a new marketing channel could permanently shift shopping preferences, or could just create a short-lived migration from existing channels. The steady-state impact of a given entry or channel addition on various marketing metrics is intrinsically an empirical issue for which we need an appropriate testing procedure. In this study, we introduce a testing sequence that allows for the endogenous determination of potential change (break) locations, thereby accounting for lead and/or lagged effects of the introduction of interest. By not restricting the number of potential breaks to one (as is commonly done in the marketing literature), we quantify the impact of the new entrant(s) while controlling for other events that may have taken place in the market. We illustrate the methodology in the context of the Dutch television advertising market, which was characterized by the entry of several late movers. We find that the steady-state growth of private incumbents' revenues was slowed by the quasi-simultaneous entry of three new players. Contrary to industry observers' expectations, such a slowdown was not experienced in the related markets of print and radio advertising.

How brand attribute typicality and consumer commitment moderate the influence of comparative advertising

This study examines how product attribute typicality and brand commitment influence the effects of comparative versus non-comparative ads on brand attitudes. Employing perspectives from the literatures on typicality and commitment, the study examines the effects of commitment to the comparison brand on the effectiveness of comparative versus non-comparative advertising. A between-informants experiment uses data from 466 student informants. It is hypothesized that (a) when the attribute under consideration is typical (atypical), among comparison brand committed informants, a non-comparative ad is more (no more) persuasive than a comparative ad, (b) when the attribute under consideration is typical, among comparison brand non-committed informants, a comparative ad is more persuasive than a non-comparative ad, and (c) when the attribute under consideration is atypical, among comparison brand non-committed informants, a comparative ad is likely to be more persuasive than a non-comparative ad, but the effect will be weaker than in the case of a typical attribute. Hypothesis (a) is supported while (b) has directional support. The results support a three-way interaction between consumer commitment, attribute typicality, and type of advertisement. The findings are relevant to a variety of contexts, such as markets characterized by high levels of market share and commitment for the market leader as well as fragmented markets where market share and commitment levels are low.

Introduction: special issue on key debates in advertising

Research on advertising has been conducted mainly from within disciplines such as marketing and reception studies. Within translation studies, research has focused more on comparative analysis of language pairs for intersystemic differences, and more recently on intercultural differences in product appeal and cultural values. Advertising as text type was most comprehensively used and developed within Western cultures, then 'exported' to other cultures. Initially the assumption was that the message could be translated and the product would sell on the basis of Western value-based market research, although this is now clearly shown not to be the case, as contributors to this volume all demonstrate through empirical studies. The introduction to this volume offers a comprehensive survey of work done in the field, both within and outside translation studies, outlines the use of semiotics as a suitable framework for research, and summarizes the key issues relating to the global vs. local debate

Personal uses and perceived social and economic effects of advertising in Bulgaria and Romania

Purpose - The objective of this paper is to uncover the underlying dimensions of, and examine the similarities and differences in, personal uses of advertising, perceived socio-economic effects of advertising, and consumer beliefs and attitudes toward advertising in Bulgaria and Romania. Moreover, it aims to identify the relative importance of the predictors of attitudes toward advertising in the two countries. Design/methodology/approach - The paper draws upon findings of previous research and theoretical developments by Bauer and Greyser, Sandage and Leckenby, and Pollay and Mittal. The study uses a stratified random sample of 947 face-to-face interviews with adult respondents from major urban areas in Bulgaria (507) and Romania (440). Variables are measured on multi-item scales as a typical application of the reflective indicator model. Findings - Results show that there are significant differences between Romanian and Bulgarian respondents in terms of their attitudes toward advertising. Romanians are more positive about advertising as an institution than the instruments of advertising. Romanians seem to accept the role of advertising in a free market economy, but have less confidence in advertising claims and techniques. Bulgarian respondents seem more sceptical toward advertising in general and are less enthusiastic about embracing the role of advertising as an institution. Moreover, Bulgarians are highly negative towards the instruments advertising uses to convey its messages to consumers. Research limitations/implications - The research findings reflect the views of urban dwellers and may not be generalisable to the wider population of the two countries. Interviewer bias was reduced by eliminating verbal or non-verbal cues to the respondents, and by the use of stratified random sampling. Practical implications - The paper suggests that the regulatory role of codes of advertising practice and industry regulating bodies should be enhanced, and their ability to protect consumers enforced. Marketing campaigns should be more inclusive to involve diverse social groups and reflect generally-accepted social norms. Originality/value - This study reveals that, while general attitudes toward advertising may be similar, attitudes toward the institution and instruments of advertising may differ even in countries with geographic proximity and low cultural distance. © Emerald Group Publishing Limited.

Ethnic groups as market segments: implications of the demand structure

Ethnic market potential in Britain has not yet been thoroughly researched. Important recent trends have focused mainly on the affective and emotional aspects of ethnicity, and included deliberations on the emergence of a revitalised neo-ethnic consciousness; its identification; politicisation, and the impact on it; of a rising third-world consciousness. This investigation attempts to take cognizance of the consuner demand of the ethnic Asian and West Indian groups, as specific market segments. It discusses the rationale for ethnic segmentation on the underlying premise, that the starting point for all product marketing is a response to perceived market opportunities. On the basis of this approach, the UK laundry detergent and automobile markets were investigated; as being representative of product categories constitutirg extremes along the purchase-search-time continuun in consuner decision-making. Ethnic groups were further analysed for their retail patronage patterns; media usage, and the differential effectiveness of alternative advertisirg strategies. The basic technique of marketing research namely the sample survey, was used with the aim of applying scientific techniques in obtaining information on ethnic groups. The integrated marketirg framework utilised allowed, moreover, for the collection of market research data on the specific issues of ethnic product penetration dealing with retailing, advertising and product promotion. The evidence highlights the fact that the cultural orientations of ethnic groups are instrunental in providing for differential demand structures. It points to the answer that ethnicity is an anchor not only for a deeper sense of identity; but also serves as a focus for the economic interests of ethnic groups. On this basis it is argued here, that since cultural levelling would eventually produce stagnation; current marketing strategies should utilise ethnic diversity as an econanic artifact; which; per se is necessary for profitability and growth; especially in innovative product design and development.

West German bank advertising and the East German public:a study in intercultural advertising communication

In the wake of German unification, initial advertising by many West German companies in the new federal states (the former German Democratic Republic - GDR) proved largely ineffective and many advertisers were forced to change their approach to this new market. The advertising task proved even more complicated for banks, because banking existed only at the most basic level in the former GDR. Furthermore, under the old regime, "capitalist" banks represented the very antithesis of the GDR's founding ideology. This analysis of advertising by West German banks - in particular Dresdner Bank - in the new federal states brings together elements of discourse and communication theory, particularly Relevance Theory [Sperber and Wilson 1986], with the overall objective of designing a model of intercultural advertising communication. A series of simple association tasks based on texts from pre-Wende advertisements was completed by a sample of advertisees (as they are called in the study) in Leipzig. The research shows the lack of relevance between the advertiser's understanding of concepts such as "credit", "bank" etc. and the associations which these concepts have for the sample of advertisees. Further analysis reveals that this lack of relevance occurs because advertisers and advertisees assign differing contexts to these concepts when they communicate through advertising. The study concludes that these different contexts, governed by the contrasting ideological, economic and linguistic environments of the advertisers and advertisees, interfere with the effective communication of the advertising message.

Effect of fatigue on consumers' advertising processing

Huge advertising budgets are invested by firms to reach and convince potential consumers to buy their products. To optimize these investments, it is fundamental not only to ensure that appropriate consumers will be reached, but also that they will be in appropriate reception conditions. Marketing research has focused on the way consumers react to advertising, as well as on some individual and contextual factors that could mediate or moderate the ad impact on consumers (e.g. motivation and ability to process information or attitudes toward advertising). Nevertheless, a factor that potentially influences consumers’ advertising reactions has not yet been studied in marketing research: fatigue. Fatigue can yet impact key variables of advertising processing, such as cognitive resources availability (Lieury 2004). Fatigue is felt when the body warns to stop an activity (or inactivity) to have some rest, allowing the individual to compensate for fatigue effects. Dittner et al. (2004) defines it as “the state of weariness following a period of exertion, mental or physical, characterized by a decreased capacity for work and reduced efficiency to respond to stimuli.’’ It signals that resources will lack if we continue with the ongoing activity. According to Schmidtke (1969), fatigue leads to troubles in information reception, in perception, in coordination, in attention getting, in concentration and in thinking. In addition, for Markle (1984) fatigue generates a decrease in memory, and in communication ability, whereas it increases time reaction, and number of errors. Thus, fatigue may have large effects on advertising processing. We suggest that fatigue determines the level of available resources. Some research about consumer responses to advertising claim that complexity is a fundamental element to take into consideration. Complexity determines the cognitive efforts the consumer must provide to understand the message (Putrevu et al. 2004). Thus, we suggest that complexity determines the level of required resources. To study this complex question about need and provision of cognitive resources, we draw upon Resource Matching Theory. Anand and Sternthal (1989, 1990) are the first to state the Resource Matching principle, saying that an ad is most persuasive when the resources required to process it match the resources the viewer is willing and able to provide. They show that when the required resources exceed those available, the message is not entirely processed by the consumer. And when there are too many available resources comparing to those required, the viewer elaborates critical or unrelated thoughts. According to the Resource Matching theory, the level of resource demanded by an ad can be high or low, and is mostly determined by the ad’s layout (Peracchio and Myers-Levy, 1997). We manipulate the level of required resources using three levels of ad complexity (low – high – extremely high). On the other side, the resource availability of an ad viewer is determined by lots of contextual and individual variables. We manipulate the level of available resources using two levels of fatigue (low – high). Tired viewers want to limit the processing effort to minimal resource requirements by making heuristics, forming overall impression at first glance. It will be easier for them to decode the message when ads are very simple. On the contrary, the most effective ads for viewers who are not tired are complex enough to draw their attention and fully use their resources. They will use more analytical strategies, looking at the details of the ad. However, if ads are too complex, they will be too difficult to understand. The viewer will be discouraged to process information and will overlook the ad. The objective of our research is to study fatigue as a moderating variable of advertising information processing. We run two experimental studies to assess the effect of fatigue on visual strategies, comprehension, persuasion and memorization. In study 1, thirty-five undergraduate students enrolled in a marketing research course participated in the experiment. The experimental design is 2 (tiredness level: between subjects) x 3 (ad complexity level: within subjects). Participants were randomly assigned a schedule time (morning: 8-10 am or evening: 10-12 pm) to perform the experiment. We chose to test subjects at various moments of the day to obtain maximum variance in their fatigue level. We use Morningness / Eveningness tendency of participants (Horne & Ostberg, 1976) as a control variable. We assess fatigue level using subjective measures - questionnaire with fatigue scales - and objective measures - reaction time and number of errors. Regarding complexity levels, we have designed our own ads in order to keep aspects other than complexity equal. We ran a pretest using the Resource Demands scale (Keller and Bloch 1997) and by rating them on complexity like Morrison and Dainoff (1972) to check for our complexity manipulation. We found three significantly different levels. After having completed the fatigue scales, participants are asked to view the ads on a screen, while their eye movements are recorded by the eye-tracker. Eye-tracking allows us to find out patterns of visual attention (Pieters and Warlop 1999). We are then able to infer specific respondents’ visual strategies according to their level of fatigue. Comprehension is assessed with a comprehension test. We collect measures of attitude change for persuasion and measures of recall and recognition at various points of time for memorization. Once the effect of fatigue will be determined across the student population, it is interesting to account for individual differences in fatigue severity and perception. Therefore, we run study 2, which is similar to the previous one except for the design: time of day is now within-subjects and complexity becomes between-subjects

Why do firms invest in consumer advertising with limited sales response? A shareholder perspective

Marketing managers increasingly recognize the need to measure and communicate the impact of their actions on shareholder returns. This study focuses on the shareholder value effects of pharmaceutical direct-to-consumer advertising (DTCA) and direct-to-physician (DTP) marketing efforts. Although DTCA has moderate effects on brand sales and market share, companies invest vast amounts of money in it. Relying on Kalman filtering, the authors develop a methodology to assess the effects from DTCA and DTP on three components of shareholder value: stock return, systematic risk, and idiosyncratic risk. Investors value DTCA positively because it leads to higher stock returns and lower systematic risk. Furthermore, DTCA increases idiosyncratic risk, which does not affect investors who maintain well-diversified portfolios. In contrast, DTP marketing has modest positive effects on stock returns and idiosyncratic risk. The outcomes indicate that evaluations of marketing expenditures should include a consideration of the effects of marketing on multiple stakeholders, not just the sales effects on consumers.

The role of national culture in advertising's sensitivity to business cycles:an investigation across continents

The authors conduct a systematic investigation into the cyclical sensitivity of advertising expenditures in 37 countries, covering four key media: magazines, newspapers, radio, and television. They show that advertising is considerably more sensitive to business-cycle fluctuations than the economy as a whole. Advertising behaves less cyclically in countries high in long-term orientation and power distance, but it is more cyclical in countries high in uncertainty avoidance. Furthermore, advertising is more sensitive to the business cycle in countries characterized by significant stock market pressure and few foreign-owned multinational corporations. The authors provide initial evidence on the long-term social and managerial losses incurred when companies tie ad spending too tightly to business cycles. Countries in which advertising behaves more cyclically exhibit slower growth of the advertising industry. Moreover, private-label growth is higher in countries characterized by more cyclical advertising spending, implying significant losses for brand manufacturers. Finally, an examination of 26 global companies shows that stock price performance is lower for companies that exhibit stronger procyclical advertising spending patterns.

Introduction : special issues on key debates in advertising material

Research on advertising has been conducted mainly from within disciplines such as marketing and reception studies. Within translation studies, research has focused more on comparative analysis of language pairs for intersystemic differences, and more recently on intercultural differences in product appeal and cultural values. Advertising as text type was most comprehensively used and developed within Western cultures, then 'exported' to other cultures. Initially the assumption was that the message could be translated and the product would sell on the basis of Western value-based market research, although this is now clearly shown not to be the case, as contributors to this volume all demonstrate through empirical studies. The introduction to this volume offers a comprehensive survey of work done in the field, both within and outside translation studies, outlines the use of semiotics as a suitable framework for research, and summarizes the key issues relating to the global vs. local debate.

Health insurance competition in Germany – the role of advertising

In the 1990s, competition among public health insurance funds (‘sickness funds’) was introduced in Germany. As one means of competition, free choice of initial health funds and subsequent switching between them was made available to all insured. Since then, the number of funds has decreased substantially, and funds have had to engage in competitive strategies to remain in the market. In this paper, we want to analyse the funds' advertising activities in the face of the changed competitive environment. This has not been possible to date due to a lack of data. We use two new datasets to get a first insight into the potential effects of competition on funds' advertising strategies; one of the volume and cost of advertisements and one of their contents. Our results suggest that competition has been associated with an increase in the amount of advertising. As to the adverts themselves, we find that there was a decrease in the share of advertisements of a ‘general’ content in favour of advertisements of a more ‘fund-specific’ content. The data therefore indicate that once the market was open to switching of funds by the insured, funds' advertising efforts changed to differentiating their own perceived strengths from those of competitor funds. These observations allow us to draw some tentative conclusions about the relevance of (attempts of) risk selection by health funds via advertisements and about the general success of the pro-competitive legislation.