Donald Lehmann

The Long-Term Impact of Promotion and Advertising on Consumer Brand Choice

Coauthor(s): Sunil Gupta, Carl Mela.

Abstract:
A study examines the long-term effects of promotion and advertising on consumers' brand choice behavior. Some 8 1/4 years of panel data for frequently purchased packaged goods are used to address 2 questions: 1. Do consumers' responses to marketing mix variables, such as price, change over a long period of time? 2. If yes, are these changes associated with changes in manufacturers' advertising and retailers' promotional policies? Using these results, implications for manufactures' pricing, advertising and promotion policies are drawn. A 2-stage approach is used, which permits the medium-term and long-term effects of adverting and promotion to be assessed. The results are consistent with the hypotheses that consumers become more price and promotion sensitive over time because of reduced advertising and increased promotions.

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