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The brand manager's dilemma: Understanding how advertising expenditures affect sales growth during a recession

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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

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... 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. ...
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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. ...
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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. ...
Article
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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). ...
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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. ...
Conference Paper
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. ...
Chapter
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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). ...
Article
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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. ...
Article
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... 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. ...
Article
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. ...
Article
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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). ...
Article
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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. ...
Article
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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. ...
Chapter
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. ...
Article
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. ...
Article
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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 ? ...
Article
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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. ...
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... 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). ...
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... 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. ...
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... 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. ...
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... 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. ...
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... 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: ...
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... 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. ...
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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.
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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.
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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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