The authors extend prior research on explaining variations in the intensity of marketing communication (i.e., advertising and promotional expenditures/sales) with a simple model estimated on cross-sectional time-series data. Analyses on firm-level data pooled at the industry level, performed for each of several industries belonging to different markets, attest to the model's explanatory power. Model validation analyses show an impressive similarity of model parameters and goodness of fit across split-half data samples for each industry analyzed. Further, for all industries belonging to a given market, the results indicate remarkable consistency in the signs of the associations between marketing communication intensity and (1) market share, (2) market growth, and (3) their interaction. However, this consistency does not hold across all markets. Plausible explanations for these results are advanced.
Get full access to this article
View all access options for this article.
References
1.
AbellDerek F., and HammondJohn S. (1979), Strategic Market Planning: Problems and Analytical Approaches.Englewood Cliffs, NJ: Prentice-Hall, Inc.
2.
AlbionMark S., and FarrisPaul W. (1981), The Advertising Controversy.Boston: Auburn House Publishing Company.
3.
AndersonPatricia M., and RubinLeonard G. (1986), Marketing Communications.Englewood Cliffs, NJ: Prentice-Hall, Inc.
4.
BassFrank M. (1974), “Profit and the A/S Ratio,”Journal of Advertising Research, 14 (December), 9–19.
5.
BassFrank M., and WittinkDick R. (1975), “Pooling Issues and Methods in Regression Analysis With Examples in Marketing Research,”Journal of Marketing Research, 12 (November), 414–25.
6.
BoltonRuth N. (1989), “The Relationship Between Market Characteristics and Promotional Elasticities,”Marketing Science, 8 (Spring), 153–69.
7.
BowmanRuss (1989), “Sales Promotion,”Marketing & Media Decisions, 24 (July), 124–6.
8.
BrobstRobert, and GatesRoger (1977), “Comments on Pooling Issues and Methods in Regression Analysis,”Journal of Marketing Research, 14 (November), 598–600.
9.
BrushBrian C. (1976), “Influence of Market Structure on Industry Advertising Intensity,”Journal of Industrial Economics, 25 (September), 55–67.
10.
BuzzellRobert D., and FarrisPaul W. (1976), “Industrial Marketing Costs: An Analysis of Variations in Manufacturers’ Marketing Expenditures,” Report No. 76–118, Marketing Science Institute.
11.
BuzzellRobert D., and FarrisPaul W. (1977), “Marketing Costs in Consumer Goods Industries,” in Strategy + Structure = Performance, ThorelliHans, ed. Bloomington: Indiana University Press, 122–45.
12.
CableJohn (1972), “Market Structure, Advertising Policy and Intermarket Differences in Advertising Intensity,” in Market Structure and Corporate Behavior, CowlingKeith, ed. London: Macmillan Publishing Company.
13.
ComanorWilliam S., and WilsonThomas A. (1974), Advertising and Market Power.Cambridge, MA: Harvard University Press.
14.
DorfmanRobert, and SteinerPeter O. (1954), “Optimal Advertising and Optimal Quality,”American Economic Review, 44, 826–36.
EhrlichIsaac, and FisherLawrence (1982), “The Derived Demand for Advertising: A Theoretical and Empirical Investigation,”American Economic Review, 72 (3), 366–88.
17.
ElseP. K. (1966), “The Incidence of Advertising in Manufacturing Industries,”Oxford Economic Papers, 18 (March), 88–105.
18.
FarrisPaul W. (1978), “Advertising Intensity in Consumer Goods Businesses: An Empirical Analysis,” Report No. 78–118, Marketing Science Institute.
19.
FarrisPaul W., and AlbionMark S. (1981), “Determinants of the Advertising-to-Sales Ratio,”Journal of Advertising Research, 21 (February), 19–27.
20.
FarrisPaul W., and BuzzellRobert D. (1979), “Why Advertising and Promotional Costs Vary: Some Cross-sectional Analyses,”Journal of Marketing, 43 (Fall), 112–22.
21.
FullerWayne A., and BatteseGeorge E. (1974), “Estimation of Linear Models With Crossed-Error Structure,”Journal of Econometrics, 2 (May), 67–78.
22.
HeskettJames L. (1986), Managing in the Service Economy.Boston: Harvard Business School Press.
23.
HolstiOle R. (1969), Content Analysis for the Social Sciences and Humanities.Reading, MA: Addison-Wesley Publishing Company.
24.
KamakuraWagner A., and BalasubramanianSiva K. (1987), “Long-Term Forecasting With Innovation Diffusion Models: The Impact of Replacement Purchases,”Journal of Forecasting, 6 (1), 1–19.
25.
KmentaJan (1986), Elements of Econometrics, 2nd ed. New York: Macmillan Publishing Company.
26.
KumarV., and LeoneRobert P. (1988), “Measuring the Effect of Retail Store Promotions on Brand and Store Substitution,”Journal of Marketing Research, 25 (May), 178–85.
27.
LambinJean J. (1976), Advertising, Competition and Market Conduct in Oligopoly Over Time.Amsterdam: North-Holland Publishing Company.
28.
MeiselJohn B. (1979), “Demand and Supply Determinants of Advertising Intensity Among Convenience Goods,”Southern Economic Journal, 46 (July), 233–43.
29.
NelsonPhillip (1974), “Advertising as Information,”Journal of Political Economy, 82 (6), 729–56.
30.
PorterMichael E. (1980), Competitive Strategy: Techniques for Analyzing Industries and Competitors.New York: The Free Press.
31.
QuelchJohn A., MarshallCheri T., and ChangDae R. (1984), “Structural Determinants of Ratios of Promotion and Advertising to Sales,” in Reserach on Sales Promotion: Collected Papers, JoczKatherine E., ed., Report No. 84–104, Marketing Science Institute.
32.
RothschildMichael L. (1987), Advertising.Lexington, MA: D. C. Heath & Company.
33.
RundfeltRolf (1973), Advertising Costs in Sweden: Structure and Determinants.Stockholm: Almqvist och Wiksell.
34.
SchmalenseeRichard (1972), The Economics of Advertising.Amsterdam: North-Holland Publishing Company.
35.
SellersPatricia (1987), “How Busch Wins in a Doggy Market,”Fortune (June 22), 99–111.
36.
Standard Industrial Classification Manual (1972). Washington, DC: U.S. Government Printing Office.
37.
WestDouglas C. (1985), “Advertising Expenditures by Industries—A Long-Run Perspective,”International Journal of Advertising, 4, 327–39.
38.
ZeithamlValarie A. (1981), “How Consumer Evaluation Processes Differ Between Goods and Services,” in Marketing of Services, DonnellyJames H., and GeorgeWilliam R., eds. Chicago: American Marketing Association.
