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Advertising and Product Quality: Are Heavily Advertised Products Better?
Abstract
It is often conceded that heavily advertised products cost more than those that are not advertised extensively. But there is considerable disagreement concerning what this difference means. Advertising's critics often claim it is evidence of monopolistic control over supply and prices, while advertising's defenders generally contend it reflects the higher quality of advertised brands. Surprisingly, there has been almost no research into whether or not heavily advertised goods are of better quality. As a preliminary inquiry into this interesting question, this paper attempts to examine the relationship between advertising expenditures and product quality.
... Even a firm's marketing mix has been used as proxies for service quality. Customers' perceptions of price, corporate image and firm's promotional activities have been used as indicators of service quality (Andreassen and Lindestad, 1998;Grönroos, 1984;Kirmani and Wright, 1989;Moorthy and Hawkins, 2005;Rotfeld and Rotzoll, 1976). Studies have also focused on specific aspects of service delivery such as environment. ...
... My bank has a good reputation (Andreassen and Lindestad, 1998;Athanassopoulos and Iliakopoulos, 2003;Aydin and Ozer, 2005;Grönroos, 1990;Lehtinen and Lehtinen, 1991) x25. My bank's promotional campaigns are effective in building a positive reputation (Aydin and Ozer, 2005;Crosby, 1991;Ndubisi and Wah, 2005;Rotfeld and Rotzoll, 1976) (Dabholkar et al., 1996;Parasuraman et al., 1988;Wang and Lo, 2002) x32. My bank performs all services right, the first time (Caruana, 2002;Host and Andersen, 2004;Sureshchandar et al., 2002; x33. ...
... However, the degree of emphasis placed on these dimensions depends on the objectives of the banks. The service quality dimensions identified in this study clearly show two different sets -one group (three dimensions) is related to the technology aspects of service quality (Al-Hawari et al., 2005;Collier and Bienstock, 2006;Joseph et al., 1999;Madu and Madu, 2002;Parasuraman et al., 2005); and the other group (six dimensions) is about human-human interactions and marketing mix items or the traditional service quality dimensions (Andreassen and Lindestad, 1998;Bolton and Drew, 1991;Grönroos, 1984;Kirmani and Wright, 1989;Levesque and McDougall, 1996;Parasuraman et al., 1985Parasuraman et al., , 1988Rotfeld and Rotzoll, 1976). ...
Purpose
This paper aims to identify the dimensions of service quality in the case of hybrid services.
Design/methodology/approach
The service quality dimensions are identified using an exploratory factor analysis (EFA). Next the reliability and validity of the factors are established through confirmatory factor analysis (CFA) using AMOS.
Findings
The paper identifies nine service quality dimensions in the hybrid services – customer service, staff competence, reputation, price, tangibles, ease of subscription, technology security and information quality, technology convenience, and technology usage easiness and reliability.
Practical implications
The various dimensions of service quality should be viewed as the levers of improving perceived service quality in the minds of its current customers. Identifying the service quality dimensions in hybrid contexts can offer service providers valuable insights regarding on which aspects of the service to focus in order to improve customer satisfaction, loyalty, and commitment to the firm.
Originality/value
This paper introduces the concept of hybrid services, wherein a mix of technology and human interaction is used to produce and deliver services. Furthermore, since hybrid services have received little attention in the literature, the study addresses this gap by identifying a set of dimensions that are relevant for measuring service quality in hybrid contexts.
... There are a variety of extrinsic cues, such as price (Kihlstrom and Riordan, 1984;Gerstner, 1985;Tellis and Wernerfelt, 1987;Boyle and Lathrop, 2009), warranty (Spence, 1977;Wiener, 1985;Kelley, 1988;Boulding and Kirmani, 1993;Lutz and Padmanabhan, 1995), guarantee (Moorthy and Srinivasan, 1995;Steiner and Yang, 2010), retailer reputation (Chu and Chu, 1994;Jones and Kim, 2010), and advertising (Rotfeld and Rotzoll, 1976;Milgrom and Roberts, 1986;Kirmani, 1990;Mizuno and Odagiri, 1990;Kirmani, 1997). In this research, we particularly focus on an art gallery's brand reputation as a high-scope cue and certificates of authenticity as a low-scope cue, because these cues can easily differentiate between experienced and inexperienced arts consumers in product evaluations. ...
... 23 This effect has also been identified in the data (e.g. Archibald et al. (1983), Caves and Greene (1996), Marquardt and McGann (1975), Rotfeld and Rotzoll (1976), Bagwell (2007) and Kirmani and Rao (2000)). 24 We model this spillover effect from umbrella branding in a reduced-form way which is similar to the way R&D spillovers between products are captured in the model. ...
This paper analyzes the implications of advertising for firm dynamics and economic growth through its interaction with R&D. We develop a model of endogenous growth with firm heterogeneity that incorporates advertising decisions and calibrate it to match several empirical regularities across firm size. Our model provides microfoundations for the empirically observed negative relationship between both firm R&D intensity and growth and firm size. In the calibrated model, about half of the deviation from proportional firm growth is attributed to our novel advertising channel. In addition, R&D and advertising are substitutes, a prediction for which we find evidence in the data. (JEL D22, E23, H25, L25, M37, O32)
... A study conducted in the shoes market, by Archibald, Haulman and Moody (1983), found a positive relationship between advertising and the quality of the product. Studies of Federal Trade Committee (1953), Lambin (1976) and Marquardt and McGann (1975) also found a positive relationship, whereas other studies lead to irrelevant or contradictory outcomes (Cole et al., 1955;Farris and Buzzell 1979;Rotfeld and Rotzoll 1976) (Tellis and Fornell, 1988). Regardless of the positive or negative relationship between advertising and quality, what it can be concluded clearly is that there is a relationship between advertising and the quality of the product/service that is being advertised. ...
... Markets will segment on the basis of near- full information, and consumers will self-select the utility maximizing price-quality bundle; Qfj will only decline when consumers with full information explicitly desire less. For experience products, empirical studies have either shown a positive relationship between Qfj and advertising (FTC 1953;Lambin 1976) or are inconclusive (e.g., Farris and Buzzel 1979;Rotfeld and Rotzoll 1976). Archibald, Haulman, and Moody (1983) and Tellis and Fornell (1988) find a positive relationship between advertising and Qfj when policing mechanisms are at work (e.g., published Qfjratings, substantial market experience). ...
The author's study suggests that competition can lead to low-quality advertisers competing against and gaining market shares from lower-priced, high-quality non-advertisers. Evidence in support of this market outcome comes from optometry, a service that has experienced advertising deregulation over the past two decades. The author discusses various explanations of this outcome, including the possibility that self-deceiving consumers relying on “illusory qualities” believe they can judge product quality as measured by the firm, though they cannot. Thus, those consumers are ultimately satisfied with low-quality products at high prices—“sweet lemons.”
... A re- cent study of the runner's shoe market by Archibald, Haulman, and Moody (1983) found a positive relation- ship between advertising and quality. Studies by the Federal Trade Commission (1953), Lambin (1976), and Marquardt and McGann (1975) also found a positive re- lationship, whereas other studies have led to insignifi- cant or conflicting results ( Cole et al. 1955;Farris and Buzzell 1979;Rotfeld and Rotzoll 1976). Though the divergent results of these studies are not widely cited in the literature, some popular examples of the heavy ad- vertising of equivalent products (e.g., branded and ge- neric aspirin) have been used repeatedly to question the role of advertising (e.g., Scherer 1980, p. 382). ...
The relationship between advertising and product quality has been a controversial topic in the literature because of conflicting empirical evidence and divergent theories about advertising's effects. The authors present an integrative theory based on consumer response to advertising and the costs of producing quality products. The theory posits that the relationship between advertising and quality is stronger when (1) quality is produced at lower cost and (2) consumers are less responsive to advertising. Such a scenario is more likely during the latter stages of the product life cycle. An empirical test supports this argument.
... • Rotfeld and Rotzoll (1976), who studied 12 product categories with 14 sets of ratings, used two agencies' measurements for 1973 and 1972, obtaining somewhat weak conclu- sions from their Spearman rank correlation coefficients. "Do heavily advertised products tend to be of higher quality? ...
This article examines one of the most controversial issues in marketing, “Does advertising increase prices?” It reviews arguments and empirical research published on both sides and concludes that an approach which distinguishes factory from consumer prices, and relative from absolute prices, can reconcile much of what has been considered conflicting evidence on this question.
... Brand names can be used to communicate unobserved quality because sellers of branded products are assumed to have invested heavily on advertising, packaging, and product design to build brand equity (Erdem and Swait, 1998). Some correlational studies also confirm that product quality is affected by brand names (Erdem and Swait, 1998), providing general support for signaling predictions in the case of low-priced consumer goods (Rotfeld and Rotzoll, 1976). Therefore, we propose the following hypotheses: ...
Private label brands are often seen as inferior to national brands across different dimensions such as quality, reliability, and prestige. They are seen as riskier choice in comparison to national brands. The contract manufacturing practice, however, may help to close the gap. Contract manufacturing practice is performed by national brand manufacturers, who use their expertise and excess capacity to produce products for private label brands. While this practice has been kept in the shadow, exposure of this information has been highlighted recently. Through a series of study, we aim to examine how exposure to such information would change consumers’ perception and behavioral intention toward the private label brand and national brand. We also aim to see if product type moderates the effect. Three experimental studies confirmed that being exposed to such information makes consumers attach higher perceived quality, lower perceived risk, and higher purchase intention toward private label brand, only when the product is a high risk product. At the same time, however, consumers express less favorable attitudes toward the national brand; but stay reluctant to switch to a private label brand, especially in the case of high risk products.
... An dieser Stelle ist es problematisch, eine Beurteilung dieser Voraussetzung auf Basis einer inhaltlichen Argumentation vorzunehmen. Bezug genommen werden kann nur auf die wenigen Untersuchungen im erweiterten Online-Kontext (Aiken und Boush, 2006;Biswas und Biswas, 2004;Wang et al., 2004;Yen und Ju, 2006) sowie auf einige Untersuchungen im Offline-Bereich (Akerlof, 1970;Dutta et al., 2007;Heil und Langvardt, 1994;Ippolito, 1990;Kelley, 1988;Milgrom und Roberts, 1986;Nell, 1999;Rotfeld und Rotzoll, 1976;San Martín und Camarero, 2005;Spence, 1973;Spence, 1974;Wiener, 1985), die die Funktion von Signalen als Qualitätsindikatoren bestätigen bzw. ...
Es existieren verschieden theoretische Ansätze, die zur Erklärung des Kaufverhaltens im Internet dienlich sein können. Dies sind die Theorie zur Diffusion of Innovations (Rogers, 1962), die Social Cognitive Theory (Bandura, 1986; Compeau und Higgins, 1995), die Flow- Theorie (Hoffman und Novak, 1996), die Expectancy Disconfirmation Theory (Oliver, 1980), Motivational Models (für einen Überblick sei auf Vallerand (1997) verwiesen) oder klassische Einstellungsmodelle wie die Theory of Reasoned Action (Fishbein und Ajzen, 1975) und die Theory of Planned Behavior (Ajzen 1985, 1991). Auch Erweiterungen bzw. Modifikationen der klassischen Einstellungsmodelle wie das Technology Acceptance Model (Davis, 1989) oder das Model of Attitude-Behavior Relations (Thompson et al., 1991; Triandis, 1977) könnten für den vorliegenden Untersuchungsgegenstand verwendet werden.
... This implies that, in equilibrium, firms spend relatively more on advertising higher intrinsic quality products, a result that has been identified empirically by the marketing literature (e.g. Archibald et al. (1983), Caves and Greene (1996), Marquardt and McGann (1975), Rotfeld and Rotzoll (1976), Bagwell (2007) and Kirmani and Rao (2000)). ...
We develop a model of firm dynamics through product innovation that explicitly incorporates advertising decisions by firms. We model advertising by constructing a framework that unifies a number of facts identified by the empirical marketing literature. The model is then used to explain several empirical regularities across firm sizes using U.S. data. Through a novel interaction between R&D and advertising, we are able to explain empirically observed deviations from Gibrat’s law, as well as the behavior of advertising expenditures across firms, the degree of substitution between R&D and advertising expenditures as firms grow large, and broadly the effects of advertising on both firm and economic growth. We find that smaller firms can be both more innovation- and advertising-intensive as in the data even when there exist increasing returns to scale in research.
... This implies that, in equilibrium, firms spend relatively more on advertising higher intrinsic quality products, a result that has been identified empirically by the marketing literature (e.g. Archibald et al. (1983), Caves and Greene (1996), Marquardt and McGann (1975), Rotfeld and Rotzoll (1976), Bagwell (2007) and Kirmani and Rao (2000)). ...
We develop a model of firm dynamics through product innovation that explicitly incorporates advertising decisions by firms. We model advertising by constructing a framework that unifies a number of facts identified by the empirical marketing literature. The model is then used to explain several empirical regularities across firm sizes using U.S. data. Through a novel interaction between R&D and advertising, we are able to explain empirically observed deviations from Gibrat's law, as well as the behavior of advertising expenditures across firms, the degree of substitution between R&D and advertising expenditures as firms grow large, and broadly the effects of advertising on both firm and economic growth. We find that smaller firms can be both more innovation-and advertising-intensive as in the data even when there exist increasing returns to scale in research. JEL codes: E2; L1; M3; O31, O32, O33, and O41.
... * Rotfeld and Rotzoll (1976), who studied 12 product categories with 14 sets of ratings, used two agencies' measurements for 1973 and 1972, obtaining somewhat weak conclu- sions from their Spearman rank correlation coefficients. "Do heavily advertised products tend to be of higher quality? ...
This article examines one of the most controversial issues in marketing, "Does advertising increase prices?" It reviews arguments and empirical research published on both sides and concludes that an approach which distinguishes factory from consumer prices, and relative from absolute prices, can reconcile much of what has been considered conflicting evidence on this question.
... Tirole (1989, p. 115) notes, however, that products which supposedly have high levels of experience qualities are often advertised heavily using noninformative media/messages and provide no information beyond existence. For experience products, empirical studies have either shown a positive relationship between quality and advertising (Archibald, Haulman and Moody, 1983;Federal Trade Commission, 1953;Lamhin, 1976;Marguardt and McGann, 1975;Tellis and Fornell, 1988) or are inconclusive (Cole et al., 1955;Farris and Buzzel, 1979;Rotfeld and Rotzoll, 1976). Schmalensee (1978) theoretically shows, however, that low-quality producers may advertise more heavily than high-quality sellers depending on their unit cost advantage and consumers' response function to advertising. ...
... Rotfeld and Rotzoll examined the product quality/advertising relationship and found little or no correlation between product quality and the level of national advertising for a large number of different products (7). That is, brands which advertised heavily were found to be just as likely to receive high quality ratings from Consumer Reports as less advertised national brands. ...
The relationship between consumer perceptions of brand quality and the level of national advertising is examined using 93 subjects for three brands of peanut butters. The association between these perceptions and purchase intentions is also reported. Results suggest that a strong link between quality and national advertising exists in the minds of consumers. Subjects associated peanut butter brand quality with the perceived level of national advertising. Additionally, purchase intentions were positively correlated with perceptions of brand quality.
... Morton made modern table salt possible when it created a way of granulating the salt so it would not lump together when moist ( " When it rains, it pours " ), or it could contribute to public health with iodize salt to aid in prevention of disease, advertising in the 1920s " Keep your family goiter free. " Innovations can make the branded product worth the higher cost (Rotfeld and Rotzoll, 1976), that is, until the innovation is imitated by all competitors. Over time, the old claims are not so much a statement of greater value as a tie to an old image. ...
Purpose
This paper aims to discuss the problems faced by US consumers as insurance companies use brand names as a heuristic tool to identify medical profligacy, penalizing consumers with higher co‐payments or even refusing funding support for new and necessary medications.
Design/method/approach
Anecdotes and descriptive reviews of the literature describe the basis for the problem. The paper looks at the use of brand names in the pharmaceutical industry in comparison with generic versions. It gives a brief history of brand name development.
Findings
The paper finds that, for the pharmaceutical companies, or any company, a brand name allows them to escape from the confines of generic demand with the price and distribution power from brand demand. Furthermore the easier name can speed adoption of a new product. However, the price spread between new brand name drugs and older ones with non‐branded competition gives rise to unfounded presumptions on all brand names.
Practical implications
Brand names can have value for both consumers and physicians, but it might be desirable for the US health care system to put an end to a brand's exclusive use beyond the innovation's patent protection.
Originality/value
The paper provides concluding recommendations of a broad regulatory solution that pharmaceutical companies would probably oppose.
This paper studies the relationship between online reviews and advertising spending in the hotel industry.
For some time economic and marketing research has examined the relationships between the level of advertising expenditures and product quality. The primary result of all this research has been conflicting theoretical perspectives and empirical findings. For some products and circumstances it does appear that the higher the advertising expenditure level, the higher is the relative quality level of the product being advertised (Nelson 1970, 1974, Klein and Leffler 1981). In other cases, there appears to be a more “perverse” (Schmalensee 1978, Comaner and Wilson 1979) relationship where the highest expenditure levels belong to those manufacturers producing the lowest quality goods.
A price-quality model is presented and tested using the PIMS database. Relative price is shown to be a function of a business’s overall reputation for quality. A business’s reputation for quality is in turn, heavily influenced by three marketing mix variables: product quality, customer service, and marketing communications efforts. Three environmental variables -relative market share, type of market entry and number of customers exert a smaller influence. The need to effectively manage these relationships in order to obtain a price premium is discussed.
Consumer preference was almost ignored when scholars discussed the factors that influenced advertising and quality strategies of manufactures in many literatures before. Therefore, I took it into consideration to probe into advertising and quality strategies in an oligopoly here. The result was that many conclusions were not the same with those without consumer preference. For example: manufactures with low quality brand will have larger market share rate and advertising expenditure and profit level if the two product is more than one that are quality elasticity inverse proportion and market share rate to sensitivity of advertising expenditure in unit cost. Moreover, manufactures with low quality brand will have larger market share rate than high ones if the two product above is equal to one and consumers prefer low quality brands to high ones in a duopoly market.
This study applies the concepts of consumer predictive and confidence values of information to consumer evaluations of food quality. Examining hypothetical findings from a thought experiment, the study offers advances in cue utilization, predictive validity, and achievement of consumer's perceived quality and actual quality. Separately, metrics for these concepts were applied in a consumer product-quality evaluation study of three brands of peanut butter. Actual quality was operationally defined in terms of Consumers Union ratings of the peanut butter. Using a between-groups, posttest only experimental design, female graduate students (n = 98) tasted and rated one of three peanut butters on the basis of quality and nine product attributes. These informants received no knowledge of brand names or comparative qualities prior to the test. The analysis indicates a nonsignificant correlation between actual quality of the brands and quality as perceived by the informants. The major cues used by informants in making their qualitative judgments (cue utilization) differed from the significant dimensions associated with actual quality (predictive validity). The findings inform the suggestion for consumer training in the process of making accurate quality evaluations.
This research extends overlapping streams of research examining asymmetric information, adverse selection, and buyer trust by presenting an empirical investigation of the process by which a market for “lemons” emerges in the claiming market for thoroughbred racehorses. The study focuses attention on the potential of quality signals and buyer trust to lessen the impact of adverse selection. Incorporating concepts from economics, marketing, and psychology, a conceptual model suggests that adversely selected racehorses, distinguished by an unintentional signal from sellers to potential buyers, will be priced lower than otherwise similar racehorses perceived to be less subject to adverse selection. Data from one day of claiming races at 16 American racetracks (744 racehorses) are used to test this study hypothesis. Results provide evidence for adverse selection and a mitigating quality signal in the thoroughbred claiming market. Implications for buyers and sellers in this market, as well as more general implications, are discussed and an avenue for future research is proposed.
The relationship between advertising and product quality has been a controversial topic in the literature because of conflicting empirical evidence and divergent theories about advertising's effects. The authors present an integrative theory based on consumer response to advertising and the costs of producing quality products. The theory posits that the relationship between advertising and quality is stronger when (1) quality is produced at lower cost and (2) consumers are less responsive to advertising. Such a scenario is more likely during the latter stages of the product life cycle. An empirical test supports this argument.
I present a model in which advertising changes consumers' recollections of their past experiences with a product. The model sheds light on several important features of advertising behavior: the relationship between advertising levels and consumer experience, the relationship between advertising and product quality, and the presence of increasing returns in the consumers' response to advertising. Importantly for empirical research on advertising, the model's comparative statics call into question the ability of standard empirical tests to distinguish informative from non-informative advertising.
This research investigates the relationship between advertising, quality, and price in the mutual fund market, considering both equity and fixed income funds. The research considers these relationships based on the results for a time period following the advertisement. Given the complexity of the mutual fund purchase decision for investors, this research provides an initial investigation into whether investors can infer mutual fund quality and price from the presence of mutual fund advertising. Post-advertising period results show a negative relationship between advertising and fund quality, indicating that previously advertised funds exhibit weaker performance than nonadvertised funds. During the post-advertisement period, both equity and fixed income funds exhibit lower expenses (ie, price) than nonadvertised funds. These research findings and implications for theory are discussed.Journal of Financial Services Marketing (2007) 12, 242–254. doi:10.1057/palgrave.fsm.4760076
As listed in an appendix to this editorial, JCA has published a number of articles and commentaries of cautionary guides for researchers. But a more basic issue comes from lapses in the students' doctoral education, or, as one member of the editorial board once put it, the lost practice of student mentoring which also applies to the lost guidance for new junior faculty.
A survey of food shoppers showed that consumers underestimate the number of advertised grocery store items reduced in price and the average amount these products are marked down. Newspaper advertisements appear to be relied upon more by consumers who believe that advertised brands are of better quality than those not advertised.
We present a price signalling model with informative advertising. A costly advertisement informs of the good's quality directly and therefore the seller determines the fraction of informed buyers endogenously. We show that informative advertising only occurs in pooling equilibria. For an advertising pooling equilibrium to exist, consumer valuation for high-quality, advertising cost, prior probability that quality is high, and inaccuracy of the buyers' pre-purchase information must be sufficiently high. For some parameters there is a unique undefeated advertising pooling equilibrium. If advertising is used in equilibrium, the adverse selection problem is mitigated.
This chapter offers a comprehensive survey of the economic analysis of advertising. A first objective is to organize the literature in a manner that clarifies what is known. A second objective is to clarify how this knowledge has been obtained. The chapter begins with a discussion of the key initial writings that are associated with the persuasive, informative and complementary views of advertising. Next, work that characterizes empirical regularities between advertising and other variables is considered. Much of this work is conducted at the inter-industry level but important industry studies are also discussed. The chapter then offers several sections that summarize formal economic theories of advertising. In particular, respective sections are devoted to positive and normative theories of monopoly advertising, theories of price and non-price advertising, theories of advertising and product quality, and theories that explore the potential role for advertising in deterring entry. At this point, the chapter considers the empirical support for the formal economic theories of advertising. A summary is provided of empirical work that evaluates the predictions of recent theories of advertising, including work that specifies and estimates explicitly structural models of firm and consumer conduct. This work is characterized by the use of industry (or brand) and even household-level data. The chapter then considers work on endogenous and exogenous sunk cost industries. At a methodological level, this work is integrative in nature: it develops new theory that delivers a few robust predictions, and it then explores the empirical relevance of these predictions at both inter-industry and industry levels. Finally, the chapter considers new directions and other topics. Here, recent work on advertising and media markets is discussed, and research on behavioral economics and neuroeconomics is also featured. A final section offers some concluding thoughts.
Nelson [J. Polit. Econ. 78 (1970) 311; J. Polit. Econ. 81 (1974) 729; Nelson P. The economic value of advertising. In: Brozen Y, editor. Advertising and society. New York: New York Univ. Press, 1974. pp. 43–66] has argued that advertising spending is a signal of product quality for experience goods because consumers can rationally infer that high-quality products would advertise more than low-quality products. In this paper, we compare Nelson's view of advertising with marketing views of advertising using ad repetition as a surrogate for ad spending. Our results show limited support for Nelson's theory but substantial support for ad repetition influencing perceived quality through attitude toward the ad.
For nearly 200 products evaluated by Consumer Reports we calculated rank correlations between brands' quality ratings and prices and advertising outlays. These correlations are related in cross-section to novel measures of buyers' information portfolios. Quality-price correlations increase with the scope for vertical differentiation and decline for innovative and “convenience” goods. Positive quality-advertising associations mainly reflect verifiable information about “quality” attributes. Evidence consistent with price as a quality signal is confined to frequent but unimportant purchases; for these “convenience” goods high prices might induce the maintenance of high quality. Advertising is not found to serve as a quality signal.
By its very nature, advertising is a prominent feature of economic life. Advertising reaches consumers through their TV sets, radios, newspapers, magazines, mailboxes, computers and more. Not surprisingly, the associated advertising expenditures can be huge. For example, Advertising Age (2005) reports that, in 2003 in the U.S., General Motors spent $3.43 billion to advertise its cars and trucks; Procter and Gamble devoted $3.32 billion to the advertisement of its detergents and cosmetics; and Pfizer incurred a $2.84 billion dollar advertising expense for its drugs. Advertising is big business indeed.
Is quality associated with price? Do products maintain the same degree of association between price and quality over time? Do particular brands of products maintain their quality-price position relative to competition? When a brand shifts its qualitative rank, does its price position also change? These are some of the questions the authors attempt to answer through analysis of reports published by Consumers Union.
Предмет статьи - рассмотрение утверждения о несовместимости рекламы, как элемента стратегии фирмы в конкурентной борьбе, с конкуренцией как теоретической конструкцией. Работа основывается на анализе эмпирических данных (показатели концентрации, доли рынка, размеры фирм) для компаний и товаров с разным уровнем расходов на рекламную деятельность. Статья, основным выводом которой стало утверждение, что обратная зависимость между степенью конкуренции и интенсивностью рекламы не имеет под собой оснований, послужила основой для многих последующих работ в этой области.
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