Advertising budgets in competitive environments

Firms can approach advertising competition either by setting advertising budgets (as in the percentage of sales method) or target sales levels (as in the objective and task approach). We study firms’ incentives to adopt one or the other posture using a two-stage model of duopolistic competition. In the first stage, each firm chooses to commit either to an advertising budget, letting its sales follow from the market response function, or to a desired sales level, promising to adjust its advertising spending accordingly. In the second stage, firms choose the actual levels of their advertising budget or sales target. When prices are exogenous, we show that, due to strategic effects, if a firm benefits from its rival’s advertising (as when advertising increases awareness of the product category) then setting an advertising budget dominates setting a sales target. On the other hand, if a firm is harmed by its rival’s advertising (as when advertising increases the firm’s share of a fixed market), then committing to a sales level dominates. We extend these results in several directions and show that when firms engage in price competition as well as advertising the nature of advertising and product-market competition interact to determine whether setting an advertising budget or sales target dominates.

从概念的符号表达到沟通的价值创造——知识产品营销时代的广告变革

随着知识经济的发展,越来越多的知识产品进入我们的日常生活,并且实物产品也开始通过知识化来取得竞争优势。知识产品所具有的无形性、路径依赖性和共生性等特点,使营销路径发生变化的同时,也促使广告产业的核心价值链以及广告运作从概念的符号表达到沟通价值创造的转变。     

Consumer response to and choice of customized versus standardized systems

Recent research on customization suggests that a need exists to examine conditions under which selling customized versus non-customized offerings will be more beneficial to vendors. To this end, this paper empirically evaluates consumer response to and choice of customized systems (offerings that are integrated and customized) in relation to standardized systems (offerings that feature integration but not customization). Through a series of studies, we demonstrate that the relationship between a buyer's systems purchase strategy and their future repurchase intentions toward the seller is moderated by a buyer characteristic (that is, a consumer's insight into his/her own preferences, or the degree to which a consumer can confidently and consistently express his or her true preferences) as well as a seller characteristic (retailer reputation). Given that consumers who are experts have greater insight into their own preferences than novices, our work also suggests that this greater insight into one's own preferences is a plausible explanation for why experts are more likely to choose a customized system. The main practical implication of our research is that it prompts managers to challenge the contention in some mass customization writings that customized offerings have universal appeal. Although the participants in our studies also tended to be more attracted to customized systems in general, this proclivity was lower for consumers with less product category expertise. This is important because our results convey that repurchase intentions towards a vendor will be higher after the purchase of a non-customized system by those consumers who lack insight into their preferences. As such, firms should try to propose customized systems only to those prospective buyers who possess strong preference insight, and propose standardized systems to those buyers who do not.     

Advertising persuasion in China: Using Mandarin or Cantonese?

Advertising persuasion may differ based on different languages and/or dialects. Using Chinese samples, this study experimentally tests how a spokesperson's accents (standard Mandarin accent and local Cantonese accent) influence advertising persuasion across different product involvements (high- or low-involvement products) and different advertising appeals (rational or emotional ads). The results show that ads promoting high (low)-involvement products will produce higher persuasion when the ads use Mandarin (Cantonese) rather than Cantonese (Mandarin). In addition, ads with rational (emotional) appeals will result in higher persuasion when presented in Mandarin (Cantonese) rather than Cantonese (Mandarin). The findings contribute to a better understanding of an ad's persuasion with respect to a spokesperson's accents, and offer managerial implications for marketers doing advertising in a multilingual environment such as China.     

Pure Components versus Pure Bundling in a Marketing Channel

This paper examines how channel interactions influence product bundling decisions by channel members. Specifically, what products or bundles should be offered, at what prices, and by which channel members, in equilibrium. To answer this, we analyze Stackelberg games between a manufacturer and retailer, with pricing and bundling as decision variables, under discrete and uniform continuous distributions of reservation prices. We find that selling pure components by both manufacturer and retailer is the equilibrium except in a narrow region of the parameter space. However, if the manufacturer can sell bundles and prevent unbundling, then such a bundling strategy is optimal in many cases. Interestingly, the channel and retailer also benefit from this strategy.     

将诗意融入课堂——谈诗歌在营销教学中的运用

首先,本文阐述了"将诗歌引入营销课堂"对营销课堂、教师、学生等多方面的潜移默化的正向影响;其次,本文介绍了营销教师运用诗歌传播营销知识的具体方法;最后,本文还探讨了学生如何运用诗歌书写营销创意,其中重点探讨了学生运用诗化语言进行广告词创作的一般方法。     

Advertising non-premium products as if they were premium: The impact of advertising up on advertising elasticity and brand equity

Non-premium brands occasionally emulate their premium counterparts by using ads that emphasize premium characteristics such as superior performance and exclusivity. We define this practice as “advertising up” and develop hypotheses about its short- and long-term impact on advertising elasticity and brand equity respectively. We test the hypotheses in two large-scale empirical studies using a comprehensive dataset from the automotive industry that includes, among others, the content of 2317 television ads broadcast over a period of 45?months. The results indicate that advertising up increases (decreases) short-term advertising elasticity for non-premium products with a low (high) market share. The results also show that an intensive use of advertising up over time leads to long-term improvements (reductions) in brand equity for expensive (cheap) non-premium products. Furthermore, an inconsistent use of advertising up leads to reductions in brand equity. The results imply that managers of non-premium products with a low market share can use advertising up to increase advertising effectiveness in the short run. However, advertising up will only generate long-term improvements in brand equity for expensive non-premium products. Finally, to avoid long-term reductions in brand equity, advertising up should be consistently used over time.     

The Consumer and Advertising Regulation in the Television without Frontiers and Audiovisual Media Services Directives

This paper aims to assess the balance between the commercial interests of broadcaster and advertiser and the interests of the viewer, as well as programme makers. The new Audiovisual Media Services Directive (AVMSD) seeks to clarify and to simplify whilst maintaining the traditional European broadcasting landscape. The recurrent theme of the debate about legislative revision has been based in the vocabulary of consumer choice empowered by technology. The use of this vocabulary then leads to assumptions about the ability of the consumer to make choices. Insofar as those choices existed, they have been limited by developments in the AVMSD and in the broadcasting environment. Despite the claims of the AVMSD about viewer choice, it seems likely that the viewer will have no choice whether to receive commercial communications or not.

Cultural resistance and the gradual emergence of modern marketing and retailing practices in Spain, 1950–1975

The backwardness and autarky of early Francoism explain why Spain failed to enter the age of mass consumption before the late 1960s. The modernization of commercial practices lagged behind the rapid growth in income per capita. This article examines the different ways in which modern marketing methods were introduced in Spain during the 1950s and the 1960s. It demonstrates that marketing as both concept and practice faced fierce cultural resistance, manifest in the derided image of the salesman and an enduring distrust of advertising.     

Investor sentiment and advertising expenditure

A strategic issue facing marketing managers is ‘how much and when’ to spend on advertising. We argue that investor sentiment in the stock market may influence advertising expenditure by affecting firms' ability to raise new funds. We show that during periods of low (high) investor sentiment, firms decrease (increase) their advertising expenditure, even though the effectiveness of advertising is greater (lower) during such periods. We also find that these results are stronger for financially constrained firms that rely more on external financing. Our findings suggest that marketing managers can improve the efficiency of their advertising expenditure by raising (reducing) it during periods of low (high) sentiment.     

Impact of culture on marketing strategy: Introduction to the special issue

This special issue of the Journal of Business Research features eleven articles selected from the papers presented during the fourth meeting of the Royal Bank International Research Seminar which took place in Montreal at the John Molson School of Business, Concordia University, September 23 and 24, 2007. They cover topics related to culture and marketing communications, consumer socialization, materialism, identity and religiosity, service quality, language effects, consumer revenge behavior and government actions.     

The impact of formal processes for market information acquisition and utilization on the performance of Chinese new ventures

The authors examine the performance impact of formal market information processes. Specifically, a theoretical model is developed that hypothesizes that formal processes for market information acquisition and utilization have direct and positive main effects on new venture success and is then tested using a sample of 222 new ventures located in China. Findings indicate that new venture success is positively correlated with the use of formal processes for market information acquisition and use. Moreover, the relative importance of formal processes to the acquisition and use of market information depends on whether the new venture serves an emerging or established market. In particular, the impact of formal processes for information acquisition is higher among new ventures that serve emerging markets. In contrast, the impact of formal processes for information use is higher among new ventures that serve established markets. We present managerial implications of our results. For example, a new venture with a strong market orientation can respond quickly to emerging marketplace needs, and can even seize the advantage from incumbents. If it is in an emerging market, however, the new venture management team should strive to excel at information acquisition; in an established market, it is important for the management team to excel at information utilization.     

Bringing product and consumer ecosystems to the strategic forefront

The widespread adoption of technology and electronic media has dramatically altered the set of products consumers compare before making a purchase decision. Online platforms have succeeded at drawing linkages among products by highlighting those that are preferred, evaluated, or purchased together. However, despite the increase in both product and customer inter-connectedness across markets, managers continue to make decisions based largely on the dynamics of competition within narrow product categories. In this article, we raise the call for a migration from a category-focused mindset to an ecosystem-focused strategic mindset that acknowledges and accounts for the network of related or unrelated entities that a specific product resides within. We illustrate the importance of this shift using examples of preference, choice, and customer networks from popular online platforms. We then discuss the impact of the shift in strategic mindset toward ecosystems on competitive structure analysis, market research, brand footprint analysis, intra-band ecosystems, promotion planning, new product development, customer valuation, strategic alliances, and market segmentation.     

Multiple-Category Decision-Making: Review and Synthesis

In many purchase environments, consumers use information from a number of product categories prior to making a decision. These purchase situations create dependencies in choice outcomes across categories. As such, these decision problems cannot be easily modeled using the single-category, single-choice paradigm commonly used by researchers in marketing. We outline a conceptual framework for categorization, and then discuss three types of cross-category dependence: cross-category consideration cross-category learning, and product bundling. We argue that the key to modeling choice dependence across categories is knowledge of the goals driving consumer behavior.     

Fortune at the bottom of the innovation pyramid: The strategic logic of incremental innovations

It is not uncommon to come across appeals in business literature exhorting managers to devote greater effort to the pursuit of radical innovations, or to see comments admonishing managers for devoting too much energy to the search for incremental innovations. Over the years, successful radical innovations have undisputedly had a significant impact on the fortunes of a number of companies. At the same time, firms cannot afford to overlook the role of incremental innovations in enhancing and sustaining the revenue and profit streams of successful radical innovations. From the standpoint of survival, growth, and profitability, both home runs, meaning radical innovations, and singles, meaning incremental innovations, matter. The fact that home runs are generally infrequent underscores the importance of frequent singles. This article explores the various competitive strategy contexts in which incremental innovations can be leveraged effectively against that backdrop.     

Understanding product migration to the electronic marketplace: A conceptual framework

We present a conceptual framework that organizes current thinking regarding increased interactivity in the electronic marketplace and its implications for product migration. Product migration refers to the extent of reliance by buyers and sellers on the electronic marketplace for activities pertaining to information search, purchase, acquisition, use, and disposal of a product. We posit that value outcomes derived by buyers and sellers from increasing interactivity mediate the relationship between interactivity and product migration. The relationship between interactivity and value outcomes for buyers and sellers is moderated by three sets of product-related characteristics: the core characteristics of the product, its purchase and use-related characteristics, and market characteristics. Inertia and resistance exhibited by buyers and sellers negatively impact product migration to the electronic marketplace and also attenuate the impact of value outcomes on product migration. In addition to guiding theoretical and empirical work in this emerging area, the proposed framework can also be employed to structure a firm's strategic discussions related to the electronic marketplace.     

The advertising effectiveness of different levels of intensity of humour and warmth and the moderating role of top of mind awareness and degree of product use

Responses to three different intensity levels of warmth (none, moderate and high) and three different levels of humour were investigated as well as the moderating role of top of mind awareness and degree of product use. Affective responses, attitude towards the advertisement (Aad) and the brand (Ab) and the favourableness of advertisement-related cognitions were enhanced by the use of warmth although the intensity level (moderate versus high intensity) did not seem to matter. As far as humour was concerned, a high-intensity humorous appeal induced most favourable affective responses, Aad and advertisement-related cognitions, while a moderate level of humour was most conducive for a favourable Ab and brand-related cognitions. Significant interaction effects suggested that the most positive advertisement effects can be obtained by combining high levels of warmth with high levels of humour, while the most positive brand effects can be obtained by combining high levels of warmth and moderate levels of humour. Emotional executions of high intensity led to the most positive affective and cognitive reactions in the case of brands that are not top of mind and to the most positive cognitive reactions in the case where the respondent was a heavy user of the product category. In particular the intensity level of humour led to significant communication effects.