You are on page 1of 9

Advertising Efficiency

For assignment help please contact at help@hndassignmenthelp.co.uk and


hndassignmenthelp@gmail.com

Advertising Efficiency and the size of advertisement outlay:


Inter brand choice, media mix and market performance written by Porter (1976). The
paper outlines a framework for modeling the cross product variation in the observed
pattern and level of product information flow. He explains that one implication of
differing information equilibria across product markets is that the mix of advertising
media utilized by sellers will vary from industry to industry. He argues that this
variation has important implications for market performance, and has also tested this
through hypothesis in the article. The researcher has used empirical data to prove his
point; he has taken a sample of 39 of the 42 consumer goods industries and has run
multiple regressions on the data about there advertising expenditures. This type of
analysis is central to the policy making so by the result of this paper there can be a total
change in the policy making in any company or even a whole industry. The major
variables that were under discussion in this paper are profit after tax as a percent of
stockholder's equity, eight- firm confirmation ratio, minimum efficient scale a s a
percent of industry sales , industry growth. The key findings of this paper are that the
elevation of market power due to advertising is primarily due to the size of advertising
outlays on network television and magazines, especially the former. Secondly, the
equilibrium in the information markets that determines sellers' proportional outlays on
the various advertising media is central to industry performance, because the results
suggest that the media have asymmetrical implications for market power. The major
limitations that are there in this particular paper are that data for some media was not
available, but the ones that were included represent a substantial majority of estimated
total media outlays. So we can say that there is not any big flaw in the research other
than the data missing but the data available covers, that missing link. The only thing
which I like to say is that an analysis of consumer protection should be related to
comprehensive model of consumers' investment in information to get a better view of
what really is the issue.

Effects of Advertising on Sales:


Seasonality in the consumer response to milk advertising with implications for milk
promotion policy written by Kinnucan and Forker (1986). In this paper, monthly data
pertaining to New York City for the years 1971-80 were analyzed to determine if a
seasonal response to milk advertising existed or not and the results were then used in
simulations based on modified version of Thompson and Eiler (1977) model to obtain
estimates of optimal monthly expenditure for milk advertising. A regression equation
have been used to estimate the additional milk sales that would have occurred had the
advertising budget been spent according to the computed optimal seasonal pattern.
Finally an estimate of the value to producers of following a prescribed seasonal
advertising pattern was provided. Empirical data has been used in the research that
shows the effects of advertising on the sales is always positive or you can say that
advertising is subject to diminishing marginal returns. The data of the New York City
metropolitan area was used because non- brand advertising and promotion of milk in
this market was heavy between 1971-80, and monthly sales and advertising data over an
extended period of time was readily available. The variables that remain under
consideration in this paper were advertising, goodwill, milk demand, milk promotion
and seasonality. The data is statistically analyzed using regression. The major findings of
the paper were that firstly, significant seasonal differences in the ability of milk
advertising to influence sales. Secondly that producer returns from milk advertising
would be maximized when the expenditures follow regular seasonal pattern. Thirdly,
firms should try to keep a constant ratio of sales to advertising. The major limitations in
this research were that the producer used to estimate the seasonality in the response to
advertising which imposes a number of implicit restrictions which influence the
estimate pattern, and other than this the study fails to take into account a number of
other factors that affect the seasonal advertising allocation decisions and finally this
study does not explicitly account for the cost savings that advertising agencies may
achieve by having complete discretion over the monthly distribution of the annual
advertising budget. In my view managers of milk promotion funds should take a close
look at likely changes on all factors before allocating annual advertising budget
throughout the year in manner that provides the maximum possible return from the
advertising investment and an other thing that an in-depth research should be done
taking into account all the variables that affect the seasonal milk advertising so that it
would be easy for the milk advertisers to decide there budget and advertising
expenditure.

Advertising and Consumption Pattern?


Teenage Drinking: Does Advertising Make a Difference? written
by Atkins, hocking and block (1984) .The paper is about the fact that whether
advertising has an effect on the consumption pattern, or you can say that what are the
social impacts of adverting. The main assumptions that are taken in this paper are
firstly, those young people who say they have seen more television and magazine ads for
beer, wine and liquor generally drink more or expect that they will begin drinking.
Secondly, considering the quantity and enticing quality of alcohol advertisements and
susceptibility of youthful audiences, we expected to find higher levels of drinking among
those most exposed to beer, wine, and liquor advertisements in the mass media. To test
the predictive positive association between amount of naturalistic exposure to alcohol
advertisements and amount of reported alcohol consumption by teenagers, the
researcher has used a co relational survey design. A questionnaire was used to ask
teenagers about their drinking behavior, their exposure to alcohol advertising, relevant
demographic information and other possible communication influences. A sample of
665 teenagers from the seventh grade to twelfth grade was taken for conducting the
survey. Then a statistical analysis was done which involves the computation of
correlations between all predictor variables and the indices representing amount of
drinking. The main variables that were used in the research are advertising exposure,
age, sex, church attendance, parental influence, peer influence. The key finding of this
particular research paper is that advertising has an influence on drinking behavior
during the adolescent years. Furthermore, it appears that the relationship is primarily
explained by advertising influence rather than reverse causation or contaminating
antecedent variables. According to my view this article has given an in-depth analysis
about the fact that advertising do have an affect on a persons drinking behavior and
according to my instinct or thinking the same is the case with every other beverage that
is available in the market.

Advertising Efficiency and Customer Satisfaction:


The effects of marketing efficiency, brand equity and customer satisfaction on firm
performance. Written by Angulo. This research focuses its attention to support
empirically and not separately the impact of marketing activities, brand equity and
customer satisfaction on firm performance. In addition, this study intends to fill the gap

of marketing efficiency effect on long-term profits. Through methodology of three


stages, two by econometric models and one using data envelopment analysis, the
authors provide empirical evidence for the marketing link to firm value. Firstly, the
results in the first stage confirm the impact of marketing assets on short-term
performance. Secondly, the marketing efficiency shows that there are firms that have
better abilities to maximize results in terms of marketing activities. Finally, some future
research lines were considered. In reference to academic relevance, this research
pretended to support empirical evidence to the field of marketing metrics in a global
context. The suggestion of Rust et al. (2004) about search for empirical support to the
chain of marketing activities has been taken into account. Another relevant aspect is the
conjunction between effectiveness and efficiency of marketing (Sheth et al. 2000).
Studies of marketing efficiency evaluate the maximization of sales in terms of
advertising. Studies of efficiency focus on measuring the efficiency score and then treat
this score as a dependent variable. This study measures the efficiency score and then
uses it as an explaining variable. Consequently it works based on the rationale of being
effective but with an efficient use of inputs and In reference to managerial relevance,
this research pretended not only to tell the board that marketing contributes to the
company, but also to give them the effectiveness of marketing in money terms. On the
other hand the use of Data Envelopment Analysis (DEA) as an evaluative technique is
practical because managers can measure their efficiency based on multiple inputs and
outputs. The main variables that are being used in this paper are advertising, brand
equity, customer satisfaction, marketing efficiency, marketing impact and firm value. A
theoretical model has been adopted and hypotheses have been formed. The research
methodology which is used consists of two stages one is econometric approach and the
second one is data envelopment approach. The key findings of this research paper are
firstly, there are significant effects of advertising spending, customer satisfaction and
brand value over short-term performance. On the other hand there is a significant
relationship among marketing activities, positions and Tobin's q after the inclusion of
the efficiency scores. According to these results, the application of DEA permits us to
discriminate between efficient and inefficient firms, and to incorporate the efficiency
score in a-posteriori regression analysis.

Advertising and its effect on Demand:

The measurement of industry advertising effects by Schultz and Wittink (1976) .the
article explains that the statement, "advertising influences primary demand," is one that
forms the basis for many marketing plans and forecasts. Some studies have reported a
positive influence of primary advertising on primary demand; no conclusive empirical
evidence has been brought to bear on the major premise. The article offers an analytical
framework for assessing the nature of different industry advertising effects. Necessary
and sufficient conditions for distinguishing among a set of theoretical cases of the
various effects are presented. The variables that are mainly used in the article are
primary advertising, selective advertising, primary demand, advertising effects. The
research is mainly done my considering the facts of selective advertising and primary
demand. There is an example that if considered, with no loss of generality, an industry
made up of just two brands: Brand 1 and Brand 2. When the effect of a brand's
advertising is to increase its own sales without affecting competitive sales, we call this
the primary sales effect of selective advertising. When the effect of a brand's advertising
is to increase its own sales and that of its competitors, we call this the primary demand
effect of selective advertising. In addition, the situation where the effect of a brand's
advertising is to increase its own sales and to decrease sales of its competitors can be
referred to as competitive advertising. Considering, three pure cases of advertising
effect: primary demand effect, primary sales effect, and competitive advertising.
Basically an empirical study is being done to understand the difference between the
three cases. From all this we can conclude that theory of industry advertising effects is
outlined which can be used to investigate empirically the influence of selective
advertising on primary demand. A set of cases corresponding to this theory is described
and a model to discriminate among them presented and this model can, be applied, and
it was our purpose to provide an analytical framework to aid marketing managers in
determining the nature of industry advertising effects as precisely as possible.

Competition and Advertising:


Territorial Exclusivity in the Soft Drink Industry written by Katz (1978). This article
is divided in two parts. Part one provides a background description of the market
structure of the soft drink industry and Part two examines reasons why syrup
manufacturers find territorial exclusivity desirable and evaluates the implication of
these exclusive arrangements for market performance. The article states the vertically

imposed territorial exclusivity in the soft drink industry eliminates direct intra brand
competition and creates regional bottlers with monopoly power in the manufacture and
distribution of trademarked sodas. Syrup manufacturers had several motives for
creating geographical franchises and continue to find these restrictions advantageous
for a variety of reasons and exclusive geographic territories benefit syrup producers both
by increasing bottler profits and by facilitating the recovery of these larger profits by the
syrup manufacturers. Some of the profit recovery methods operate by fostering
increased syrup sales. Regarding advertising volume and the 'free rider' problem, the
writer say that, the existence of territorial exclusivity causes more resources to be
channeled into advertising by the bottlers than presumably would be bought in its
absence. The resulting impact on resource allocation, however, is unclear as the
relationship between the amount of advertising that would in fact be done if there were
no territorial restrictions and the socially optimal level of advertising remains unknown,
as does a proper definition of the socially optimal level of advertising in the soft drink
industry. The research is mostly dependent on the literature rather than any facts or
figures and that is the week point of this article that the things that are said in the article
aren't backed by proofs. So, for further study on this topic one has to be more precise
and use more numbers to interpret and present the results in a better way.

2.1 Brand image and advertising:


The article The role of advertising in brand image development is written by
Meenaghan who was a Lecturer in Marketing, Department of Marketing, Graduate
School of Business, University College Dublin, Blackrock, County Dublin, Ireland in year
(1995). The article is intended to give information about the brand image development
by the use of advertising. The author briefly explains about the increasing concerns of
brand image by the corporations/firms and their use of advertising for better results. In
this article the concept of branding is regarded as a relation with consumer. The author
used various variables and related them together in a form of dependence and created a
whole picture of brand image development. His study is not in terms of research but his
article is intended to give a better understanding to readers about the topic with proper
references and using simple explanations. In this article the author discussed that the
most confusing terminology is brand identification and brand image. The concern of
which he mentioned was that on corporate level both of the above mentioned terms are

taken with the same meaning and representation. But in fact both are different in
meaning and elaboration. In this article, the lion's share of discussion went to brand
image. But brand identity, brand itself, consumer's lifestyles, their values and their
perception about the brand were also discussed in a considerable detail. The author
used very simple language and the 34 best possible references to explain the
development process and the way the variables interact and stack together. The articles
states that increasingly consideration is given to the image of the brand and the best way
to improve, or develop is by advertising. It states that the brand name states its
perception, values and benefits for the consumer. It has to meet the expectations of the
consumers. Lastly it says that the brand should be given values more realistic and
human like, instead of mechanistic values. In my opinion, the author is successful in
relating all the identified variables with the development of brand image. One thing
which I would recommend is that he should have given the latest explanations using the
market share and top of mind recall by referring to specific top brand and the way they
could improve their identity and image.

2.8 New approaches towards measuring advertising effectivess:


The article A New Approach to Measuring Advertising Effectiveness is written by Hall,
in June (2001). This article is about the measurement of effectiveness of advertising.
The author described new ways of measuring effectiveness of advertising and helped us
better understand the core effects and responses from consumers to measure the
effectiveness of advertising. This article is intended to provide the readers with the
information about the working mechanism of advertisement and the perception a
consumer has for it. The article is study based in which several references, and general
knowledge is used to explain the 42 information which is very effective for
managements to understand. Observations are made and references for those are used
while making statements in the article. This article is very informative for marketing
managers as well as the senior level managers, because is provides us with the base of
advertising and its effects on consumers, and as high level managers are mostly ignorant
of this all, this would help them take better decisions in the interest of achieving their
set goals. Also students get a lot of information from this article. The discussion about
the exposures is very important for young marketing students. The core of advertising
AIDA is discussed to better help and understand the working of advertising, making it

very interesting and useful for marketing students. Major variables discussed in this
article are Accuracy, sensitivity, marketing, Post-Experience exposure and PreExperience exposure. The article overall is well written and the authors effort for
combining all the perception variables together and relating them in a way that it makes
sense of its effects on the advertising effectiveness has made it very interesting indeed.
The article has no special research discussed. If it could include some examples and
research than it would have been easier to understand some psychological concepts
discussed in this article.

2.9 Measuring advertising effectiveness:


This article A Model for Predictive Measurements of Advertising Effectiveness is
written by Lavidge and Steiner in October (1961). This article is about the functions of
advertising and its core goals of, as in what it is supposed to do. The 43 authors then
related these goals with the advertising itself and showed implications of these for the
measurement of the effectiveness of advertisements. The authors stated that the effects
of most of the advertisings are long term. The authors mentioned that if the results are
visible in long run, then there would be some short term effects which eventually will
increase the sales results in the long run. So the author in this article suggested that by
measuring those effects we can predict the effectiveness of advertising in the long term.
The authors made their statements on their knowledge and observations. No as such
study is being used, but these statements are very effective for understanding the
behaviors of consumers as a response to the advertising and hence making the
managers predict the effectiveness of advertising in the long run. The article is basically
for the managers who are planning and measuring the advertising and its effects on the
company. The major variables discussed in this article are Awareness, Conviction,
Purchase, Preference and Knowledge. The major limitations of the article are that it is
not proved that these statements are true and are really effective for making a plan or
decision for measuring advertising effectiveness. The article could have been more
useful if it could give a study or a prove that all the statements and models discussed are
in reality useful for measuring the advertising but the authors did not include their
study in this article. Secondly if few examples of short term effects leading to long term
effect could be presented then it would have been easier for the readers to understand
the whole concept.

2.13 Effects Psychographic variables on advertising effectiveness:


The article Consumer Lifestyles: A social Stratification Perspective is written by
Lawson and Todd, Marketing theory, University of Otago. The article is about the
lifestyles and the social phenomenon which affects the lifestyles. According to this
article, previous thinking was that social class has an effect of lifestyles, but in reality the
psychographics affect the lifestyles. The article is intended to provide a better insight of
how to segment lifestyles and achieve the desired marketing results. The authors
presented a brief explanation about lifestyles and then related the lifestyles with
psychographics. The article explained the relation of lifestyles with VALS (Value added
lifestyles), social class and status. The major variables discussed in this article are
psychographics, social class, social status and lifestyle but the major discussion was
projected towards the lifestyles. The writing style used for the article is relatively simple
and most of the managers and readers can understand the article without any prior
knowledge, but if it few examples would have been there, then it would have presented a
better picture about the effects of psychographics on the lifestyles. This article is very
useful for the managers as lifestyles are very dynamic and segmentation is the core of
any marketing mix. The management would like to know that what segmentation is
better for them and how to target their specific customers. This article is also very
important for young students to understand the working of psychographics in the real
world. The demographics are effective for segmentation but psychographics are difficult
to be measure creating any affect on segments. Therefore this article was very
informative and important indeed.

You might also like