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Abstract
What is the relationship between a company's advertising expenditure during a recession and its sales? For many years, studies have found that increasing or maintaining advertising expenditure levels during a recession tends to correspond to better rates of sales growth in future years. Yet none of these studies have used widely available and well respected data sources together with advanced statistical techniques to make their case. This study assembles new data in a statistically reliable framework to examine the effect of the amount spent on advertising on sales during the recession of 1990–1, and finds a measurable relationship between the two, even when controlling for other factors such as company size and past sales growth.Journal of Brand Management (2002) 10, 106–120; doi:10.1057/palgrave.bm.2540109
... Thomas Kamber [21] compared the change of sales, profits and market shares of businesses, which decrease, stabilize or increase the advertising budget in the recession period. As a result, he found significant growth on sales, profits and market shares of businesses, which stabilize and increase advertising budget in the prevailing and following periods. ...
... Kristian S. Palda [35], Russell S. Winer [48], Kamber [21], Tellis and Tellis [42] and many other researchers state that there is a strong and positive correlation between advertising expenditures and sales revenue including economic recession periods. Moreover, it is indicated that advertising expenditures have a strong impact on sales in the short term-for a year-and also decreasingly growing impact on sales in the long term-more than a year. ...
... Within the context of this method, correlation and regression analyses can be conducted. Roland S. Vaile [46], Palda [35], Winer [48], Kamber [21] has found positive relation between advertising expenditure and sales revenue. ...
The aim of this research is to measure the efficiency of advertising expenditures on sales revenue of businesses that are traded on BIST in Food, Beverage and Tobacco Sector by data envelopment analysis. According to that, 22 businesses’ ‘Advertising Expenditure’ and ‘Net Sales Revenue’ data for the years between 2009–2013 are gathered and they are respectively determined as ‘input’ and ‘output’ data. As a result, AEFES, BANVT and SKPLC coded businesses are ascertained as absolute efficient for all years. It is also found that CCOLA, DARDL, KENT, KERVT, TBORG and ULKER coded businesses’ advertising budgets remains idle.
... At the outset banks might seem completely vulnerable to unfounded bank runs during recession. However, research (Barnes, 1997;DeRiemer & Baxter, 1986;Heffernan, O'Neill, Travaglione, & Droulers, 2008;Kamber, 2002;McCalister, Srinivasan, & Kim, 2007;Rhee & Mehra, 2006) shows that banks might hold the key to their own survival. Increased communication from banks to customers during recession, particularly in the form of nonproduct advertising, can reassure customers who might otherwise react to first-come, first-served triggers. ...
... Increased advertising spending not only lowers the risk of stock plummet for a publicly traded company but also provides the key to recession survival for many institutions (Kamber, 2002). Not only can advertising spending not only boost short-term profits, it almost guarantees higher levels of growth following the recession's end. ...
... Furthermore, the relationship between advertising spending and positive growth has the most strength during times of economic crisis. Kamber (2002) attributes this pattern to the public's desire for information during periods of financial stress and the advertiser's opportunity to reassure customers while the competition's communication efforts lie dormant due to budget cutbacks. ...
This study explores the attitudes and actions of bank managers toward communication spending during recession. Results of this study indicate that organizational leaders cut communication spending early during recession and also erroneously rely on the bank's financials to mitigate irrational customer withdrawals. This research is used to illustrate the need for public librarians to meet the needs of bank stakeholders when their institution ceases to communicate during crises, for academic librarians to educate students in undergraduate and graduate programs regarding heightened information needs during recession, and for corporate librarians to understand a potential avenue for competitive advantage during recession.
... This tendency is the confirmation of the microeconomic generality, which declares that the increased demand of advertisement is mostly a function of the country's gross domestic product. Kamber (2002) has performed a synthesizing empirical analysis on the subject. They compared several databases (the adspending reports of AdSpender and Competitive Media Reporting, sampling 60000 companies, with the Compustat database of Standard & Poor, sampling 10000 companies, including some of the Fortune 500 list actors), and based on these sources they discovered positive correlation between increased advertising budget and the improvement of of sales performance. ...
... In Kamber's (2002) study, the main objective was to give best practices for the brand manager to understand more transparently the consequences of decreasing or increasing the advertising budgets in times of recession. Results showed that the correlation is mostly positive between advertising spending and sales performance, though this value varies between industrial sectors (Kamber 2002, p. 116). ...
... In view of the former conclusions, the positive effect of advertising is probably not an irrealistic assumption, as long as R&D expenditures and product innovations contribute to corporate objectives, then advertisement can fill this part in a recession as well. Based on the observed cases, with the change of consumer habits and with the implementation of new technological innovations (see web 2.0.), the good advertisement can have accentuated part in the increase of sales, but it has greater significance: it can support the diffusion of innovations (Kamber 2002), if managers realise that it is worth relying on advertising in recession times. ...
... A literaturaé vasta e controversa ao discutir causalidade entre publicidade agregada, demanda e economia agregada (Jung e Seldon, 1995, Picard, 2001, Kamer, 2002. De acordo com a literatura, o debate está longe de ser esgotado. ...
... De acordo com Mohr e Shooshtari (2003) incertezas podem ter razões como: incertezas de mercado, econômicas (devido aos ciclos econômicos), tecnológicas e de competição. Além disso, autores como Ashley et alii (1980), Kamer (2002), Molinari e Turino (2006, 2007, O'Donovan et alii (2000), Rehme e Weisser (2007) destacam que há uma relação entre a publicidade, o consumo e o crescimento da economia. Chang e Chan-Olmsted (2005) encontraram evidências de que o produto interno brutoé uma das variáveis determinantes dos dispêndios de publicidade. ...
This study aims to verify the contribution of advertising expenditures to firm value. To reach this goal, we considered business cycles, which follow a stochastic process and may influence the decision as to the amount to be spent in advertising. With the optimization of these expenditures under the business cycle effect, it is, in fact, possible to analyze whether the results positively contribute to firm value. Data from US companies of the consumer staples sector from 1997 to 2008 were employed to test the proposed model through multiple regression and panel data. The results indicate favorable evidences which confirm the proposed model.
... In more recent studies, Leong et al. (1996), Leach and Reekie (1996), Metwally (1997), Elliot (2001), Pagan, Sethi and Soydemir (2001), Kamber (2002), Yiannaka, Giannakas and Tran (2002), Ouyang, Zhou and Zhou (2002), Zhou, Zhou and Ouyang (2003), Pauwels et al. (2002), Esteve and Requena (2006), Agyapong, Okyere and Nyarku (2011), Banerjee, Siddhanta and Bandopadhyay (2012) provide the evidence of the impact of advertising expenditure on sales revenue. Leong et al. (1996) reveal a strong positive relationship exists between advertising expenditure and sales by applying co-integration tech- nique. ...
... Pagan et al. (2001) uses bivariate vector auto regression model to study the effectiveness of advertising on sales and reveals that one time increasing in advertising expend- iture leads to increase in the sales of orange with a one month lag. Kamber (2002) Some of the recent studies have found only a minor or no relationship between advertising and sales. These include Beckwith (1972), Hamilton (1972), Aaker, Carmen and Jacobson (1982), Bass and Pilon (1980), Hanssens (1980), Jagpal (1981), Leone (1983), Baltagi and Levin (1986), Tschoel and Yu (1991), Kwoka (1993), Andras and Srinivasan (2003) and Sharma and Sharma (2009). ...
This article builds on the existing literature by studying the inter-linkage between sales and advertising expenditure in India. The article takes a sample of 100 Fast-Moving Consumer Goods (FMCG) companies in India and studies their advertising and sales for the period ranging from 2001–2002 to 2010–2011. The study uses various tools including mean, standard deviation, coefficient of variation, kurtosis, skewness, correlation, regression for getting insights into the data. Econometric analyses including auto-correlation, partial auto-correlation, augmented Dickey–Fuller test, vector auto regression, variance decomposition analysis, Johansen’s co-integration and vector error correction model have been employed to find out the bivariate relationship between the variables under reference. The article finds that the dependency of the current period’s advertising expenses on previous years’ sales is far more significant than the dependency of sales revenue over advertising expenses. The article provides significant inputs for the further studies that may focus on adding more variables such as profits and firm value, and study the multivariate relationship among them.
... Ez az összefüggés annak a mikroökonómiai elvnek a megerősítése, mely szerint a megnövelt reklámkereslet leginkább a gazdaság jövedelmi helyzetétől, a GDP-től függ. .A közelmúltban Kamber (2002) és csoportja végzett a témában szintetizáló empirikus vizsgálatot. Kutatásukhoz több adatbázist vetettek össze (az AdSpender és a Competitive Media Reporting reklámköltési kimutatásait, 60.000 vállalatot mintául véve, összefüggésben a Standard & Poor Compustat adatbázisával,10.000 ...
... A felismerés, miszerint a marketingdöntések befolyásolni képesek a cég jövőbeli tőzsdeértékét és pénzügyi teljesítményét, illetve, hogy a reklámkiadások mértéke a cég piaci értékének indikátora a befektetők felé (Frankenberger -Graham 2004), hozzásegítették a kutatókat a pozitív irányú összefüggés empirikus igazolásához. Kamber (2002) tanulmányában a fő cél gyakorlati implikációt nyújtani a marketingmenedzserek számára. Azért, hogy felismerjék, milyen következményekkel jár a megnövelt vagy éppen lecsökkentett reklámbüdzsé válsághelyzetben. ...
A reklámozás fontosságának megközelítése megváltozott az elmúlt évtizedben, főleg az
elmúlt évek gazdasági válságának következtében. A közgazdászok hagyományosan nem
tekintették a reklámot egy értékes tényezőnek egészen addig, amíg empirikus kutatások nem
kezdték el érzékeltetni azt, hogy a reklámozás hatással van a fogyasztói észlelésre azáltal,
hogy jelzi a mögöttes termék minőségét. Következésképpen, azok a termékek, melyeket
gyakrabban reklámoznak, valószínűbb, hogy magasabb minőség-asszociációval rendelkeznek.
Nemrégiben, amikor a cégek szembetalálkoztak a globális gazdasági válsággal, a
marketingmenedzserek felfedezték, hogy a reklámköltségek megfelelő allokációja
recesszióban egy fontos döntési tényező a versenyhelyzet, a fogyasztói magatartás, a trendek,
vagy az iparági feltételek mellett. A cégeknek fel kellett ismerniük, hogy
marketingkommunikációs büdzséjüket alapvetően más módon tervezzék válságban, mint
fellendülés idején. Ezen felül, a cégek, melyek fenntartják reklámozási szintjüket válságban,
kettős célt érnek el: egyrészt, több bizalmat szereznek fogyasztóiktól, másrészről pedig
kedvezőbb képet mutatnak a befektetőik felé. A tanulmány a szakirodalom különféle
megközelítésein keresztül arra törekszik, hogy felhívja a figyelmet az ún. prociklikus
reklámbüdzsé-allokáció (reklámköltségek csökkentése válságban és túlköltés fellendülés
idején) kockázatait, melyek többek között a nyereségesség, fogyasztói bizalom és a
versenyképesség hosszú távú negatív kihatásaiban jelentkezhetnek.
... Marketing investment during a recession creates opportunities to the enterprise and enterprise gains competitive advantage in sales, market share and returns during recession (Kamber, 2002;Roberts, 2003). Roberts (2003) divides the 1,000 PIMS (Profit Impact of Market Strategy) businesses into those that cut, maintained and increased marketing budgets during recession. ...
The challenging times and competition pose a serious threat to the survival of enterprises. The main objective of this chapter is to discuss the marketing strategies that help enterprises to continue their financial health in challenging times such as during the period of recessions or in rapidly changing competitive markets. A framework of strategies, which may enable enterprises to sustain and thrive their profitability in challenging and competitive markets, is proposed based upon the strategies on which the literature has reached a broad consensus. The proposed marketing strategies for challenging and competitive markets include creating customer value, differentiation and innovation, finding alternative ways to price cut, emphasizing brand value, maintaining marketing and advertising, focusing on targeted marketing communication, reviewing and measuring marketing budget effectiveness, understanding marketplace, developing strategies based upon customer insight, becoming customer-centered, focusing on customer retention and loyalty, and re-evaluating and prioritizing customer segments.
... Whereas it may seem quite natural for corporate organizations to increase their advertising expenditures in the periods of economic boom, the decision is not always unidirectional in the times of economic decline. Some firms may see the period as an opportunity to crystallize their products in the market and, therefore, sustain and (where possible) increase their advertising expenditures (Kamber, 2002). Others may, however, view worsening economic situations as threats and thus downsize their advertising budget (Shaver & Shaver, 2005). ...
Studies suggest that advertising expenditures respond to changes in the Gross Domestic Product and other macroeconomic indicators of a country. This study examines how economic fluctuations affected total newspaper advertising expenditures in Nigeria during the 2016 economic recession and the succeeding recovery period in 2017. Hinged on the theoretical assumptions of the Principle of Relative Constancy, which postulates that the level of advertising expenditures is determined by the general state of the economy, the study adopted content analysis research method and composite sampling technique to analyse 288 editions of Vanguard, Guardian and Nigerian Tribune newspapers during the third and fourth quarters of 2016 and 2017. The collected data were analysed using percentage and Chi Square statistical tool. Findings show that despite the slight changes in total newspaper advertising expenditures recorded during the 2016 economic meltdown and the succeeding recovery period, the variation did not cause a significant difference in the overall inflow of newspaper advertising revenues in 2016 and 2017. It recommends that advertisers should sustain their patronage for newspaper as this will not only contribute to the revenues of the print media but also increase the visibility of advertised products and services and contribute to the overall growth of the economy.
... Dan et al (1984) explained, the effects on profitability that occur when a firm advertises increase significantly when the product is introduced and decreases advertising as the product moves through its life cycle and interpersonal communications take effect. Kamber (2002) found a measurable relationship between advertising expenditure and sales, even after controlling other factors, such as, company size and past sales growth, etc. ...
... E. g., the two incidences where past sales have a negative impact on advertising (food as well as textile and clothing industry) could be interpreted as past-oriented, anti-cyclical advertising strategies. Research has shown the effectiveness of anti-cyclical advertising (Frankenberger & Graham, 2003;Kamber, 2002) or proactive approaches during recessions which was emphasized again more recently (Quelch & Jocz, 2009). However, both seem less prominent among practitioners. ...
Werbeinvestitionen haben unmittelbare Relevanz für die Finanzierung von Medien und in der Folge für deren Beitrag zur Erfüllung wichtiger gesellschaftlicher Funktionen. Die vorliegende Dissertation befasst sich vor diesem Hintergrund aus unterschiedlichen analytischen Perspektiven mit der übergeordneten Frage, von welchen Faktoren insbesondere die Höhe, aber auch Verteilung von Werbeinvestitionen beeinflusst wird. Zur theoretischen Fundierung der Analysen werden einerseits meso- und mikro-theoretische Ansätze aus der strategischen Kommunikation und der Entscheidungstheorie herangezogen; andererseits wird an eine langjährige, makro-theoretische Debatte zwischen „activist school" und „determinist school" zur Analyse von Beziehunμen zwischen ökonomischen Variablen und Werbeinvestitionen angeknüpft. Hierbei leistet die Dissertation auch einen Beitrag zur Mikrofundierung der beiden genannten Denkschulen. Neben einer Übersicht zur bisherigen Forschung sowie einer Systematisierung der Einflussfaktoren bilden eine Befragungsstudie, zwei Zeitreihenanalysen und ein theoretischer Beitrag die Eckpfeiler dieser Arbeit. Aus ihnen lassen sich folgende Kernergebnisse extrahieren: Werbebudgetierungsentscheidungen werden unter dem Eindruck einer Vielzahl an potenziellen Einflussgrößen getroffen, welche zum Teil starke Interdependenzen aufweisen. Die Art des Budgetierungsverfahrens ist dabei mitbestimmend, welche Einflussgrößen wirksam werden und welche nicht. Die der Entscheidung vorgelagerten Strategien (Werbe- oder Kommunikations- sowie Unternehmensstrategie) und ökonomische Indikatoren (die finanziellen Möglichkeiten oder die Umsatzentwicklung des Unternehmens, Konsumausgaben privater Haushalte) stellen die wichtigsten Einflussgrößen dar. Die Studien zeigen des Weiteren, welche enormen Auswirkungen Krisenereignisse auf Budgetierungsprozesse und -ergebnisse entfalten können. Advertising investments are directly relevant for media financing and media's contribution to the fulfillment of social functions. Against this background, this thesis is concerned with the overarching question what factors drive the amount but also the distribution of advertising investments. This question is elaborated from different analytical viewpoints. The theoretical foundation for the analyses, on the one hand, stems from meso- and microtheoretic approaches in strategic communication and decision theory; on the other hand, a long-standing macro-theoretic debate between the "activist school" and the "determinist school" is taken up in order to analyze relationships between economic variables and advertising investments. In this respect, this dissertation contributes to the micro-foundation of said schools of thought. Besides a research review and a systematization of influencing factors, a survey, two time series analyses and one theoretic analysis build the cornerstones for this thesis. The following conclusions can be extracted from these studies: Ad budget decision making is affected by a multitude of potential influencing factors which are often strongly interrelated. The type of budgeting method co-determines which influencing factors take effect and which do not. Strategies that precede ad budget decisions (advertising or communication strategy as well as corporate strategy) and economic indicators (a firm's financial possibilities or sales, private consumption) are the most important influencing factors. Additionally, the studies show that crisis can have enormous effects on advertising decision making processes and their results.
... The results showed that advertising has influenced sales, though its relative effectiveness was not the same for all the categories of firms. Kamber (2002) established a measurable relationship amongst advertising expenditure and sales, even after controlling other factors, such as, company size and past sales growth, etc. Elliot (2001) revealed that advertising has a significant positive outcome on food industry sales and this relationship between advertising expenditure and sales appears to be stable. Pagan et al (2001) studied the effectiveness of advertising on sales using bivariate Vector Auto Regression model and showed that one time increase in advertising expenditure leads to increase in the sales of orange with a one month lag. ...
Advertising is a type of message that attempts to infer the virtues of products, services and ideas in terms of consumer needs and wants. Some companies or organizations embrace advertising to achieve goodwill, high market share and sales. Good quality of advertisement plays a major part in creating customer fidelity and brand confidence resulting in enhancement of sales and profit. This research work examines the association between advertisement expenditure, sales and profit of twelve beverage companies listed on the Bombay Stock Exchange for the period 2009 to 2013.The data is analyzed using correlation and regression analysis. The outcome exposed that all the dimensions which have been used in the study are positively related to each other.
... Dzieje się tak, ponieważ o ile reagując na poprawę koniunktury przedsiębiorstwa zazwyczaj zwiększają swoje budżety reklamowe, o tyle w czasie recesji, choć większość z nich, zgodnie z dominującą tendencją, postępuje odwrotnie, to niektóre, wbrew niekorzystnym warunkom otoczenia,utrzymują, a niekiedy nawet podnoszą swoje budżety na reklamę (m.in. Kamber, 2002;Andras, Srinivasan, 2003;Srinivasan et al., 2005;Tellis, Telli, 2009). ...
Celem artykułu jest przedstawienie zasadniczych uwarunkowań związku między reklamą a gospodarką, rozumianego jako relacja między wysokością wydatków reklamowych a PKB, PNB, dochodem rozporządzalnym lub innymi miernikami dochodu narodowego. Artykuł ma charakter przeglądu literatury światowej i zawiera syntezę wyników dotychczasowych badań na temat czynników wpływających na kierunek i siłę związku między gospodarką a reklamą. Przedstawiono w nim wyniki badań dotyczące czasowego kontekstu omawianej relacji, wpływu specyfiki kraju i panujących w nim warunków społeczno-ekonomicznych na jej kształt oraz występujących w niej różnic w zależności od rodzaju medium reklamowego, którego dotyczy. Badanie kierunku, siły i przyczynowo-skutkowego charakteru związku między gospodarką a reklamą i jego uwarunkowań jest uzasadnione z praktycznego punktu widzenia, zarówno w wymiarze mikro-, jak i makroekonomicznym. Wyniki tego typu analiz mogą służyć przewidywaniu popytu na usługi reklamowe, kondycji rynku mediów i sektora kreatywnego, prognozowaniu wzrostu gospodarczego, a także podejmowaniu decyzji o alokowaniu budżetów reklamowych i marketingowych.
... While it is easy to measure advertising expenditure, there is little consensus on how to measure advertising effectiveness (Fischer & Himme, 2016;Simon, 1984;Soberman, 2009). We measure advertising effectiveness by the elasticity of profits to advertising (e.g., Kamber, 2002;Srinivasan et al., 2011). We find that advertising is indeed more effective during low (vs. ...
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.
... "Strong brand equity allows the companies to retain customers better, service their needs more effectively and increase profit." Kamber (2002) looked at advertising expenditures during an economic turndown. The study noted that reductions in adspend in 1991 lagged the economic downturn by about six months. ...
In this chapter, we evaluate the dollar amount spent on advertising relative to sales, profit margin, and growth rates to study the effectiveness of advertising in today’s retail environment, and whether it leads directly to higher sales and increased profits affording positive earnings for the investor. The study illustrates the use of data envelopment analysis (DEA) technique to benchmark 16 apparel firms to evaluate the effectiveness of their advertising dollars on the sales, profit margin, growth, return on assets (ROA), return on equity (ROE), and return on investment (ROI).
... Notwithstanding the immediate effect of advertising on sales, long term advertising campaigns can also have a positive measureable long term effect on sales, but this effect depends on the short term effects. In brief, economic advantages accrue to a firm that maintains or increases its marketing especially as regards shareholder value, customer loyalty and long term profitability, even during recessionary periods (O'malley, Story & O'sullivan 2011;Kamber 2002). ...
... Competitor's investment behavior ξ t Demand shock at period t (mean is zero and variance is σ 2 ) with pdf f (·) and cumulative distribution function (cdf) F (·) 1 The approaches of estimating this advertising effectiveness have been well-studied in the previous research, see Samuels (1970), Kamber (2002), and Sundarsan (2007). (2) where the subscript "b" is for the basic case. ...
This paper studies a stylized two-period model with a capital-constrained retailer who attempts to achieve its short-term survival and long-term profitability by implementing the associated marketing/operational strategy. Given the demand information, we analyze the problem for three scenarios: (1) basic model; (2) competition; and (3) uncertain advertising effectiveness. The results suggest that the retailer should place the retail price and order quantity at the monopoly level, and adopt the “invest-all-or-none” advertising investment strategy for different market situations. When the market demand is stochastic, however, the optimal policies obtained in deterministic demand case may fail. Alternatively, we propose two operational strategies, i.e., low-risk strategy and high-risk strategy, to balance the pricing, ordering and advertising investment decisions through an appropriate manner. We numerically investigate the impacts of market parameters on the optimal decisions under demand uncertainty, and show that many results obtained in deterministic demand case continue to hold and present some other interesting observations. Finally, we extend our model to consider the independent exclusive advertising effect with competition, the saturation effect of advertising investment, and the multi-period case.
... It was also established that the influence of advertising on sales of grape fruit is more instant and comparatively large. While investigating the link between advertising expenses and sales revenue of a company during the time of recession, [9] established a considerable relationship between advertising and sales, even after controlling some important factors, for example, past sales and its growth, organization size, and so on. ...
... It was also established that the influence of advertising on sales of grape fruit is more instant and comparatively large. While investigating the link between advertising expenses and sales revenue of a company during the time of recession, [9] established a considerable relationship between advertising and sales, even after controlling some important factors, for example, past sales and its growth, organization size, and so on. ...
This paper is the first attempt to study the impact of operating and financial expenses on sales revenue of the Fauji Fertilizer Company Limited in Pakistan and to seek the nature as well as the strength of the relationship between sales and these expenses. The time series data for fourteen years covering 2002-2015 used were analyzed by using the Ordinary Least Square technique and a multiple regression model. These were supplemented with the elasticity and causality tests. The major findings established that there is a substantial relationship between operating expenses and sales revenue of the company, however; the relationship between financial expenses and sales revenue is not so strong comparatively. The results also confirmed that there is a significant increase in the sales revenue of the company caused by a unit change in operating expenses. It was suggested that the company should make aware the customers through advertising and general publicity on the uses and benefits of their multi-products produced. The more increase in expenses on operational aspects over the financial expenses was recommended in the future for the company in this study.
... Cleeren et al. Hanna et al. (1975) x x Van Raaj et Eilander (1983) x x Hoch et Banerji (1993) x Nandan et Dickinson (1994) x x Quelch et Harding (1996) x Estelami et al. (2001) x x Axarloglou (2003) x Deleersnyder et al. (2004) x Lamey et al. (2007) x Flatters et Willmott (2009) x x Steenkamp et Fang (2011) x x Lamey et al. (2012) x x Millet et al. (2012) x Kaytaz et Gul (2014) x Briesch et al. (2009) x Albion et Farris (1981) x x Chevalier et Scharfstein (1996) x Taylor (1999) x Gijsenberg et al. (2010) x x Ma et al. (2011) x Gordon et al. (2013) x Van Heerde et al. (2013) x x Hampson et McGoldrick (2013) x Kaswengi et Diallo (2015) x x Picard (2001) x Hoch et al. (2002) x Kamber (2002) x Frankenberger et Graham (2003) x Srinivasan et al. (2005) x Srinivasan et Lilien (2009) x Tellis et Tellis (2009) x Deleersnyder et al. (2009) x Srinivasan et al. (2011) x Graham et Frankenberger (2011) x Sethuraman et al. (2011) x Özturan, Özsomer et Pieters (2014) x (a) Les variations du moral des ménages affectent-elles le montant dépensé au niveau des formats de magasin, au-delà de l'impact des variables marketing conventionnelles (exemple, le marketing mix) ? Si oui, comment se manifestent-t-elles ? ...
La multiplicité des formats de magasin (Drive, hypermarchés, hard discounts, magasins de proximité) a conduit les chercheurs en marketing à s’intéresser aux facteurs qui influencent le choix d’un format de magasin donné par rapport à un autre, en étudiant l’influence des variables telles que l’assortiment, le prix, et les promotions. Plus récemment, les analystes se sont demandés si le contexte économique pouvait aussi affecter la préférence des ménages à l’égard des formats de magasin sans pour autant apporter une réponse convaincante. Pour contribuer à ce débat, important à l’heure où de nombreuses économies sont en crise, cette recherche s’intéresse à l’influence du moral des ménages sur le montant dépensé par visite à travers les différents formats. Une analyse des données de panel sur la période 2004–2013 et portant sur quatre formats de magasin montre que la variation (baisse, amélioration) du moral des ménages a des effets asymétriques et non linéaires sur le montant dépensé par visite et que cela dépend aussi du cycle économique (expansion, contraction).
... Moreover, the pressure to cut marketing expenditure exerts a downward pressure on production costs, broadly defined as the costs of achieving a particular output (e.g., an advertising campaign) (Kamber 2002). Because demand for such output is scarcer, the firm is able to negotiate more favorable purchase conditions. ...
T he critical role of research and development (R&D) and advertising in the marketing strategy of the firm is well established. This paper conceptually and empirically examines why and how much the effectiveness of these two marketing instruments differs between times of economic expansions versus periods of economic contractions—and whether these results depend on the cyclicality of the industry in question. We consider a key marketing metric (market share) and a key financial metric (firm profit). Our empirical setting is 1,175 U.S. firms across a time period spanning over three decades. We find that R&D and advertising contribute to firm performance but that their effectiveness is not constant across the business cycle. Increasing advertising share in contractions has a stronger effect on profit and market share than increasing advertising share in expansions. Likewise, investments in R&D in contractions lead to higher gains in market share and profit than R&D investments in expansions, albeit only in subsequent years. If in contractions the firm faces tight budget constraints and has to choose between either maintaining R&D or advertising, our simulation results show that maintaining R&D is associated with better company performance. We find that advertising effectiveness, in general, and in contractions, in particular, is systematically moderated by the degree of cyclicality of the industry in which the firm operates. In relatively stable industries, advertising effects are small or even nonsignificant, and they do not go beyond the year the firm advertises. However, in highly cyclical industries, advertising effects are long-lasting, its total effect being 50% larger (market share) and 200% larger (profits) than in industries of average cyclicality. The effect of industry cyclicality on advertising effectiveness is especially pronounced in contractions. Collectively, these findings provide valuable and actionable insights into how firms should respond to contractions in order to grow profits and market share.
... The study is based on works of Wood and O'Hare (1991) and Chang and Chan-Olmsted (2005), who proposed two tests for the PRC, depending on the nature of provided data 13 . In order to compare with other countries, the Figure 1 below presents the performance of sample countries selected by Picard (2001) 11 See Kamer (2002). 12 See Costa (2006). ...
The strong performance of the Brazilian economy during the 2000s allows the expansion of various sectors, including the advertising market, associated with the growth of the domestic market and the intensification of trade relations with other countries. The main objective of this study is to test the Relative Constancy Principle (RCP) in the context of greater integration with international economy, controlling for several factors that may exhibit some influence on the performance of the advertising market. We adopt a panel data of two periods for 49 countries and estimate a linear fixed effects model with dummies, controlling for the heterogeneity and unobserved factors of the countries. The results suggest that the advertising market of China, the United States and India have significant patterns above the average. The study does not support the RCP, yet they identify important regularities in those countries in relation to the advertising market. The level of activity and international reserves have a significant effect on the advertising market in countries; the higher the share of industry and services (urbanization), the higher the expenses on advertising; the inflation rate is nonlinearly related to the advertising market performance; the economic freedom index and the presence of Generations X and Y are associated with a reduction in advertising expenditure.
... Advertisement provides an unusual opportunity to differentiate and gain more market during recession. The result however, is mixed with [20] found increase in advertisement increases the profit. Study by [21] reported that cutting advertising in recessions does not affect profits. ...
... Studies of Drucker (1986), Jacobs (1991), and Porter (1992) suggested that firms compromise on discretionary investments during difficult economic times. However, studies such as Srinivasan, Gary, and Arvind (2005); Clark (2008); Kamber (2002); and Graham and Kristina (2008) viewed that there are advantages of increasing these activities when other firms are compromising it. When other firms are reducing these activities, an emptiness is created in the market, which provides opportunity to differentiate and gain market through advertisement. ...
Theoretical and empirical studies have focused on discretionary investments such as research and development (R&D) and advertisement as value-creating activities. This empirical research article examines the determinants of the discretionary investment policy of food sector firms in India. The study aims to analyze the impact of financial policies and firm characteristics on the discretionary investment strategy of the food industry firms. The article uses the partial least squares structural equation modeling (PLS-SEM) to understand the drivers of discretionary investment policy of food sector firms. The study finds that investment policy of firms is a major determinant of profitability of food sector firms. Higher investments in capital expenditures and working capital result in higher profitability. Management efficiency significantly influences firm profitability. The results suggest that riskier firms in food sector might focus on R&D investments as a strategy to generate more cash flows. Size of firm is negatively related to R&D intensity. Smaller firms in food sector tend to invest more in R&D. The study does not provide evidence to suggest that profitable firms invest more in R&D activities.
... The impacts of these expense accounts on the sales revenue are presented widely in the literature [25]. Vaile [31], Palda [23], Winer [34], Tellis and Tellis [30], McGraw-Hill research [20], Kamber [16] and many other researchers state that there is a strong and positive correlation between the advertising expenditures and the sales revenue including the economic recession periods. Moreover, it is indicated that the advertising expenditures have a strong impact on sales in the short term (shorter than a year) and also decreasingly growing impact in the long term. ...
It is observed that the advertising and R&D expenditures of businesses, which are traded on Borsa Istanbul (BIST) in the Food, Beverage and Tobacco Sector, differ according to their business sizes. Within this context, two assumptions are developed. At first, the large businesses invest on the advertising and R&D expenditures regularly from sales revenues. At second, the relatively smaller businesses invest on these operations only in the periods which they generate over-expected sales revenues. In order to test these assumptions, the impacts of advertising and R&D expenditures on the sales revenues of large and middle-sized businesses in Food, Beverage and Tobacco Sector in BIST (2009–2013) are analyzed by panel regression after 22 businesses in the sector are classified as the large and middle-sized businesses according to their number of employees. As a result, it is proved that the large businesses invest on the advertising and R&D expenditures regularly. On the other hand, the middle-sized businesses set the R&D budget depending on their annual sales revenues whereas they act as the large businesses in terms of setting advertising budget.
... The influence of marketing expenses in terms of advertising and R&D on firm performance has been investigated in the literature, mainly finding a positive and statistically significant relationship with sales (Graham and Frankenberger 2011;Kamber 2002) and market share (Steenkamp and Fang 2011). However, these contributions focus mainly on large firms, overlooking the SME context where obtaining data is also more difficult. ...
The objective of this paper was to investigate the association between branding, captured by the combined use of the number of corporate and product trademarks and marketing expenses, and small- to medium-sized enterprise (SME) sales performance in the fashion industry. The results of the panel regression model indicate that corporate trademarks and marketing expenses do have a positive association with SMEs sales performance, and in particular, marketing expenses show the highest estimates. These results suggest that branding may also play a relevant also in the SME context, thus opening new paths for research within this field.
... Symbolic attributes, indeed, can have a direct impact on sales growth (Ataman & Ülengin, 2003). Furthermore, well-planned branding strategies are positively connected with sales growth (Kamber, 2002;Kärreman & Rylander, 2008;Bruce et al., 2012). Hence, a family brand, as a symbolic attribute, contributes to a H#2 Famil y-ba sed branding strategies: ...
... Dyer (1988) menar att god reklam, bör anspela på mottagarens sociala värderingar och attityder snarare än rationella budskap som rör produkten. Kamber (2002) fann vid en undersökning av den senaste lågkonjunkturen, som rådde under tidigt 90-tal, att företag som satsade mer på reklam under perioden ökade försäljningstillväxten med 7 % på ett år och 25 % efter ytterligare fyra. Resultatet indikerade även att de branscher som satsade mest på reklam var den tillverkande diverseindustrin, samt gummi-och flygbranschen, de som skar ner i reklambudgeten återfanns inom diverseförsäljningen, oljebranschen och dagligvaruhandeln Baines et. ...
... Moreover, the pressure to cut marketing expenditure exerts a downward pressure on production costs, broadly defined as the costs of achieving a particular output (e.g., an advertising campaign) (Kamber 2002). Because demand for such output is scarcer, the firm is able to negotiate more favorable purchase conditions. ...
The critical role of research and development (R&D) and advertising in the marketing strategy of the firm is well established. This paper conceptually and empirically examines why and how much the effectiveness of these two marketing instruments differs between times of economic expansions versus periods of economic contractions-and whether these results depend on the cyclicality of the industry in question. We consider a key marketing metric (market share) and a key financial metric (firm profit). Our empirical setting is 1,175 U.S. firms across a time period spanning over three decades. We find that R&D and advertising contribute to firm performance but that their effectiveness is not constant across the business cycle. Increasing advertising share in contractions has a stronger effect on profit and market share than increasing advertising share in expansions. Likewise, investments in R&D in contractions lead to higher gains in market share and profit than R&D investments in expansions, albeit only in subsequent years. If in contractions the firm faces tight budget constraints and has to choose between either maintaining R&D or advertising, our simulation results show that maintaining R&D is associated with better company performance. We find that advertising effectiveness, in general, and in contractions, in particular, is systematically moderated by the degree of cyclicality of the industry in which the firm operates. In relatively stable industries, advertising effects are small or even nonsignificant, and they do not go beyond the year the firm advertises. However, in highly cyclical industries, advertising effects are long-lasting, its total effect being 50% larger (market share) and 200% larger (profits) than in industries of average cyclicality. The effect of industry cyclicality on advertising effectiveness is especially pronounced in contractions. Collectively, these findings provide valuable and actionable insights into how firms should respond to contractions in order to grow profits and market share.
Lack of funds and difficult to access to formal loans from banks are problems faced by Vietnamese enterprises in general and Hanoi enterprises in particular. There have been many domestic and international studies on accessing to bank credit capital. While the research works focused on the analysis from a corporate perspective, no specific corporate disclosure has been made in Hanoi, in the context of the Covid pandemic. This study aims to identify the important factors affecting access to bank credit capital in Hanoi, through interviews with 200 customers, and to use a quantitative study method (linear regression). The results showed that there were five factors affecting access to bank credit capital in Hanoi: (1) Economic background, (2) Secured Assets (3) Business Plan, (4) Productivity and (5) the relationship between companies with banks.
The unprecedented crisis due to the COVID-19 pandemic has resulted in a shift in consumers’ attitude, behaviour and purchasing habits across the globe. While brands make all the efforts to cope up, they also need to devise strategies to survive in the post-crisis situation. It is in the light of this disturbed equilibrium that the present study is undertaken. Using structural equation modeling (SEM)-based analysis of 240 consumer responses, the article analyses the direct influence of pandemic communication and the indirect impact of brand attitude and product category on three specific brand outcomes, viz. image, trust and loyalty. The findings reveal a positive and significant impact of communication during pandemic on all three brand outcomes under investigation. Further, though the results do not divulge the moderating role of brand attitude, they establish the impact of pandemic communication on brand loyalty for non-essential product category. On the basis of the findings, the study yields useful suggestions that can be implemented by brands to hold themselves more strongly in the post-pandemic future.
Among the diverse strategies that restaurants use in recessions, some studies have shown that strategies that increase advertising, profit margins, or asset turnover have yielded promising results in terms of firm performance. However, the success of these turnaround strategies might be due to the health or size of a firm rather than the implementation of these strategies. Therefore, this study empirically tested this question utilizing the propensity score measure (PSM) due to concerns with selection bias across restaurant segments. The results showed significant improvements in revenue for limited-service and franchise restaurants when aggressive advertising was used but no improvements in profitability. The profit margin strategy had no impact on revenue but affected profitability and stock returns positively for all segments. Finally, the asset turnover strategy had adverse effects on revenue the year after a recession for all segments. These mixed results suggest that managers need to be cautious when implementing recession turnaround strategies.
Advertising plays a key role in a dynamic economy. It provides valuable information about products and services in an efficient manner; communicates customer value, builds brand awareness and creates demand. In a recession, the first things that a company usually cuts come from the advertising budget. When companies begin to cut back on advertising during an economic downturn, they become less visible to the public. While it make sense to cut off from communication budget, the evidence shows that the companies which advertise during an economic downturn, have expanded their market share and have maintained their solid image. Therefore according to marketers, neglecting marketing efforts during an economic downturn will result in weakening the brand and making it less profitable in the long run. The present study aims to provide an understanding of the marketing communications’ specifically advertising’s impact on companies’ performance during and after recession. It lays out the theoretical foundations to evaluate the impact of advertising during the recessions and provides some evidence from the world. It is believed to be paramount to examine the existing literature and researches to create awareness in the field, about the importance and impact of advertising during economic downturns.
Krizler ile birlikte tüketicilerin hayatında yaşanan köklü değişimler, bireylerin tüketim alışkanlıklarını da değiştirmektedir. Tutum ve davranışları değişen tüketiciler için artık tüketici davranışlarını kriz öncesindeki haliyle açıklayan literatür yetersiz kalmaktadır. Bununla birlikte; kriz sona erse bile, tüketici krizde yaşadığı travmadan önceki tutum ve davranışlarına tam olarak dönmemektedir.
Firmalar ise genellikle, kriz dönemlerinde pazarlama bütçelerinde kesintiye gitmek ve büyük ölçüde fiyat kırmak dışında günü kurtarmaktan öte bir kriz planına sahip değildir. Kısa vadeli aksiyonlarla uzun vadeyi düşünmeden atılan hayatta kalma adımları, firmaların marka ederlerine büyük zarar vermektedir.
Bu çalışmanın amacı da krizlerin tüketiciyi ne denli değiştirdiğini ve firmaların ise bu yeni duruma nasıl bir strateji geliştirmesi gerektiğini gözler önüne sermektir. Özellikle Türkiye’de son dönemlerde şiddetlenen ekonomik ve siyasi krizin tüketici üzerindeki etkilerinin pazarlamacılar tarafından doğru anlaşılıp doğru aksiyonlarla cevap bulması, Türkiye ekonomisinin geleceği için de çok önemlidir. Araştırmada yer alan bir diğer ülke olan Yunanistan’ın ise yaşadığı kronikleşen krizden, Türkiye’nin çeşitli dersler çıkarması ve bu kültürel anlamda Türkiye’ye benzer olan Yunanistan’ın yaşadığı sancılı süreçlerden daha az geçmesi de amaçlanmıştır. Türkiye’de yaşanan akut krizin, Yunanistan’da olduğu gibi kronik kriz haline gelmemesi için bu çalışma iyi irdelenmelidir.
Araştırmada; Türkiye’den 428, Yunanistan’da 302 katılımcı bulunmaktadır. Araştırmada şampuan ve mobilya sektörleri ile ilgili sorular sorulmuştur. Türkiye’den elde edilen verilere göre; marka güveni, genel marka ederi ve fiyat bilinci, satın alma niyetini etkilemektedir. Yunanistan’dan elde edilen verilere göre; marka güveni ve genel marka ederi, satın alma niyetini etkilerken fiyat bilincinin satın alma niyetini etkilemediği görülmüştür. Her iki ülke ve her iki sektör için ise; siyasi ve ekonomik krizin; marka güveni, genel marka ederi ve fiyat bilincinin satın alma niyetindeki etkisinde moderatör rolü olmadığı gözlemlenmiştir.
Ancak; krizin tüketim alışnalıklarını kökten değiştirdiği bilindiğinden ötürü, benzer araştırmaların yapılarak krizlerin tüketim üzerindeki etkisinin incelenmesine yoğunlaşmak ve farklı araştırmalarla bunu desteklemek gerekmektedir.
This study examines the impact of advertising to determine whether advertising expenditure after economic shocks is associated with hospitality firm performance. Using the ordinary least squares (OLS) regression models for the earnings response coefficient study, we found that firm performance was positively related to hospitality firms that spent more on advertising immediately after a global financial crisis. Furthermore, this research revealed that long-term performance among hospitality firms was associated with increased advertising expenses after a global financial crisis. These findings have practical implications, providing hospitality industry managers with advertising guidelines to develop resilience during financial setbacks caused by economic shocks.
The challenging times and competition pose a serious threat to the survival of enterprises. The main objective of this chapter is to discuss the marketing strategies that help enterprises to continue their financial health in challenging times such as during the period of recessions or in rapidly changing competitive markets. A framework of strategies, which may enable enterprises to sustain and thrive their profitability in challenging and competitive markets, is proposed based upon the strategies on which the literature has reached a broad consensus. The proposed marketing strategies for challenging and competitive markets include creating customer value, differentiation and innovation, finding alternative ways to price cut, emphasizing brand value, maintaining marketing and advertising, focusing on targeted marketing communication, reviewing and measuring marketing budget effectiveness, understanding marketplace, developing strategies based upon customer insight, becoming customer-centered, focusing on customer retention and loyalty, and re-evaluating and prioritizing customer segments.
There has been much interest among academicians and practitioners to understand the role of marketing expenses in contributing to the financial performance of organizations. Especially, in times of recession, budget reduction, or market contraction, marketing budgets get the major cut. However, organizations continue to spend millions in the development and execution of marketing programs. This paper examines the effect of advertising and sales incentives on the revenue and profit of Grameenphone and bKash, who are the market leaders in their respective industries of Bangladesh. With the help of secondary data, it has been found that there is a negative relationship between advertising and financial performance (i.e. revenue and profit), but sales incentives on the other hand have a positive relationship with revenue and profit.
There has been much interest among academicians and practitioners to understand the role of marketing expenses in contributing to the financial performance of organizations. Especially, in times of recession, budget reduction, or market contraction, marketing budgets get the major cut. However, organizations continue to spend millions in the development and execution of marketing programs. This paper examines the effect of advertising and sales incentives on the revenue and profit of Grameenphone and bKash, who are the market leaders in their respective industries of Bangladesh. With the help of secondary data, it has been found that there is a negative relationship between advertising and financial performance (i.e. revenue and profit), but sales incentives on the other hand have a positive relationship with revenue and profit.
Research has addressed the issues of advertising during recession mostly from the industry perspective or at the conceptual level. The present study has explored the advertising agency's viewpoint of recession and its subsequent fallouts in the industry. The study was based on twenty seven in-depth interviews conducted with top
management representatives of 23 major advertising firms in India. The questions were related to the external and internal changes that
take place in the advertising agency during recession. The findings suggested that there were changes in the advertising budget, advertising
strategies, advertising appeals, media and internal changes in the agency during recession.
The subject of this article is the relationship between advertising and economy in terms of advertising expenditures and their changes and economic growth. The long time, worldwide debate on strength, direction and conditions of this relationship is discussed, including the Principle of Relative Constancy (PRC). The article was written as an introduction to research planned in Poland and other countries in Central and East Europe.
The multiple store formats (Drive, hypermarkets, hard discount stores, convenience stores) tend to strengthen inter-format competition in addition to the intra-format competition. Thus, when he or she has to shop, the consumer is now facing several solutions. Research in marketing was much interested in determining the choice of store formats using variables such as the composition of the assortment, price, and sales promotions. More recently, analysts have raised the issue of whether the economic context could affect households’ preferences for store formats without providing a convincing answer. To contribute to this debate, which is now important at a time when many economies are in crisis, this research examines the influence of consumer confidence on households’ spending per trip. An analysis of panel data during the 2004–2013 period and four store formats shows that the changes (increase, decrease) in consumer confidence have asymmetric and nonlinear effects on households’ spending per trip across the different store formats and this also depends on the economic cycle (expansion, contraction).
Nos últimos anos, o crescimento do mercado publicitário brasileiro é notável, contudo não se encontram estudos que busquem uma compreensão mais ampla dessa dinâmica. Tradicionalmente, emprega-se o Principio da Constância Relativa (PCR), o qual estabelece uma relação entre o desempenho do PIB e os gastos com propaganda. Para o período analisado (1997-2010), o PCR não encontrou suporte empírico. Para aprofundar a análise, empregou-se a Análise de Componentes Principais a fim de mensurar a influência de outros fatores macroeconômicos sobre o desempenho do mercado publicitário brasileiro. Os resultados sugerem que a dinâmica do mercado interno/externo (associado à expansão industrial e à queda do desemprego) explica 41% da variabilidade total dos dados, constituindo a principal explicação para as despesas em propaganda no período.
Purpose
This paper aims to address two unique and important questions. First, how do recessions directly affect firms’ marketing spending decisions? Second, and more importantly, do firms which are more committed to marketing spending through past recessions achieve better stock market returns?
Design/methodology/approach
This study is based on a combination of National Bureau of Economic Research, COMPUSTAT and Center for Research in Security Prices data on 6,000 firms between 1982 and 2009 which are analyzed using panel data-based regression models.
Findings
The authors find that firms cut marketing spending during recessions. However, firms committed to marketing spending during past recessions achieve better stock market returns. The findings are found to be robust across B2B and B2C industries, different periods and US firms which vary on the proportion of their global revenue from non-US sales.
Research limitations/implications
Top executives cut marketing budgets during recessions; however, if they can resist the pressures, and strategically continue to make marketing investments during recessions, they will achieve higher stock market returns.
Originality/value
This is the first paper to establish the longer-term (not short-term) positive stock market performance of continuous (not episodic) marketing spending through past recessions, i.e. the view that marketing spending is necessary (not discretionary) for stock returns.
This paper builds on the existing literature by studying the linkages between advertising expenditure, sales, and profits in India. The paper takes a sample of 100 FMCG companies in India and studies their advertising expenditure and sales for the period ranging from 2001-02 to 2010-11. The study uses various tools, including mean, standard deviation, coefficient of variation, kurtosis, skewness, correlation, and regression for getting insights into the data. Econometric analysis, including auto-correlation, partial auto-correlation, augmented Dickey-Fuller test, vector auto regression, variance decomposition analysis, Johansen's cointegration, and vector error correction model were employed to find out the bivariate relationship between the variables under reference. The paper points towards the dependency of sales revenue and profit after tax on advertising expenses besides showing an obvious impact of sales revenue on profits. The paper provides significant inputs for further studies that may focus on adding more variables such as profits and firm value and study the multivariate relationship among them.
Advertising plays a major role in marketing for the companies. The conventional approach suggests that advertising by the company helps in increasing the sales. This article investigates the relationship between advertising expenditure and sales with reference to Indian service sector. It is analyzing the long-run and short-run properties of the sales–advertising expenditure relationship for 106 companies. Data from year 2000 to 2012 have been used. Augmented Dickey–Fuller test (ADF), Engle–Granger two-step cointegration, Granger causality test and the vector error correction model (VECM) have been used to test the relationship. The results of the five groups based on the size of the companies showed varied results. The companies in the first and second quintiles were analyzed using error correction models since the variables were found to be cointegrated. For the companies in the third, fourth and fifth quintile, the variables were not cointegrated, and these were analyzed using VAR. The causality between sales and advertising expenditure was tested using Granger causality test. The results show that the relationship between advertising expenditure and sales varied with the size of the company. The larger companies showed a bidirectional relationship between advertising and sales, whereas in smaller companies a long-run increase in sales led to a decrease in advertising expenditure.
In today's global economy, social media and technological advances have changed the way businesses interact with their clientele. With new forms of communication and IT practices, companies seek innovative practices for maintaining their consumer loyalty. Customer Relationship Management Strategies in the Digital Era blends the literature from the fields of marketing and information technology in an effort to examine the effect that technological advances have on the interaction between companies and their customers. Through chapters and case studies, this publication discusses the importance of achieving competitive advantage through implementing relationship marketing practices and becoming consumer-centric. This publication is an essential reference source for researchers, professionals, managers, and upper level students interested in understanding customer loyalty in a technology-focused society.
Purpose
– The purpose of this paper is to provide an understanding of the effects of advertising based on economic cycles. To comprehend advertising effects in the restaurant industry from an economic cycle perspective, this study investigated both short- and long-run advertising effects under periods of economic contraction and expansion and compared those effects between the two economic periods.
Design/methodology/approach
– The data were collected from the COMPUSTAT database for the restaurant industry (SIC 5,812) from 1979 to 2010. To estimate the economic cycles, the 2005 year-based real gross domestic product (GDP) was used from the Bureau of Economic Analysis. Also, all variables were depreciated by the value of the US dollar in 2005. For estimation, a single equation error correction model was used to examine the short-term and long-term effects of advertising.
Findings
– The results of this study indicated that both the short- and long-term effects of advertising on sales growth were more obvious in contraction periods than in expansion periods. However, the short-run effects of advertising on brand equity did not significantly differ between expansion and contraction periods. Further, the long-term effects of advertising on brand equity were greater in expansion periods than in contraction periods. The findings suggest that restaurant firms should not reduce their advertising budgets during periods of economic contraction to take advantage of superior sales growth outcomes during these periods.
Practical implications
– The results of this study provide restaurant managers with useful practical implications. During economic contraction periods, restaurant managers should not reduce advertising budgets to take an ascendant position in terms of sales growth. Though the net positive effect at year t + 1 of contraction periods was smaller than that of expansion periods for sales growth, this is temporal and the long-run positive effect on sales growth spreads into future periods. Thus, a counter-cyclical advertising strategy could compensate for reduced sales from weak customer demands during economic contraction periods.
Originality/value
– There have been many empirical studies on the advertising effect in the literature. However, this study examined whether the effects of advertising differ between economic expansion and contraction periods. This specificity is helpful for industrial practitioners as well as academic researchers.
Purpose
– The purpose this paper is to analyze the causal relationship between promotional mix (PROMOMIX) which includes advertising, sales promotion, personal selling, direct marketing and gross profit (GRPROFIT) in the cement industry in India, while also trying to study their long-term and short-term relationship so as to understand the impact of one variable on another.
Design/methodology/approach
– Both the variables PROMOMIX and GRPROFIT were subjected to log transformations and then to stationarity testing and subsequently tested for the presence of cointegration after which the vector autoregressive (VAR) model was constructed to explain after how many time periods, the changes in one variable impact the other. The impulse response function (IRF) and forecast error variance decomposition (FEVD) were also studied to see the time path and proportion of variation in a variable, respectively, to shocks in the other.
Findings
– The results reveal the absence of cointegration but presence of unidirectional Granger causality running from GRPROFIT to PROMOMIX and highlight that current marketing communications budget is influenced by one-and-a-half year back profits. The VAR results are also supported by the IRF and FEVD results which show the response of PROMOMIX variables over time to a change in GRPROFIT.
Research limitations/implications
– The results imply that cement firms in India follow a top-down approach to budget allocation and increase their promotional budget when profit falls.
Originality/value
– This paper will help brand managers in the Indian Cement industry to be aware of the causal relation between marketing communication and profit when they take budget allocation decisions.
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