The authors examine the link between advertising and price effects and propose that this relationship depends on the specific advertising positioning strategy employed by an advertiser. The authors note that advertising has different goals, depending on the competitive context of the brand, with some advertisers positioned to differentiate between brands and others positioned to narrow the perceived difference between brands. The authors identify specific types of nonprice advertising positioning that increase brand equity and category price sensitivity, those that decrease both, and those that increase brand equity while increasing category price sensitivity. The hypotheses are tested in two experiments across different product categories. The results imply that tests of advertising effectiveness must extend beyond brand attitudinal measures.
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