Post by mishuf309 on Feb 17, 2024 4:01:20 GMT
This article is excerpted from the book "How Advertising Works: The Role of Research (Advertising Foundation)" The author of the article is Alexander L.Biel. When economies weaken, it's natural for businesses to look for ways to reduce expenses. Marketing budgets in general , and advertising budgets in particular , are among the first targets; because they can be reduced relatively easily. However, little is known about the effects of changes in these expenditures on market share and profitability. Do budget cuts really help short-term profitability? What are the risks, if any, of cuts in advertising budgets? Of course, not all marketers retreat when the economy declines. What "George Borst", Toyota's marketing manager in the USA, told the Wall Street Journal reporter at the beginning of the 1990-1991 crisis: We see this as a period that will strengthen Toyota's image.
When things are going bad you really have to spend. If you neglect to Namibia Phone Number List accelerate, you can really lose a lot. What can be learned from marketers taking a more proactive position? What is happening to their market share and profitability? A series of joint studies conducted by the Oglivy R&D center and the Strategic Planning Institute provide some answers to these questions. These studies all used the unique PIMS database. This section is based on empirical studies conducted by these two institutions. PIMS(profit impact of market strategy). PIMS is the only database that contains both marketing and financial information for the same company. At the time of this review, the database contained 4 years of data for each of 749 businesses. These businesses included manufacturers of durable and non-durable consumer goods as well as service institutions. These businesses were located in North America and Europe. Businesses with large market shares contributed data, as did companies with small market shares.
Contribution of Advertising to Market Share/Profitability The first issue that needs to be examined is the contribution of advertising expenditures to market share and profitability - under normal conditions; because this creates the necessary framework for analyzing the impact of the crisis. More specifically, does it pay off for a marketer to spend money on advertising under all circumstances? This is the most critical starting point today, when many marketers question the value of advertising and turn to promotions and other marketing stimuli. The first study focused on 749 businesses included in PIMS. In order to measure the contribution of advertising, a 'spend measurement' was required. To eliminate the brand size effect (i.e., larger brands spending more than smaller ones), it was decided to compare the ratio of advertising to sales with those of competitors. This allowed businesses to be divided into five groups by comparing their "ad/sales" ratios with their competitors' ratios. The research clearly shows the connection between "advertising/sales" ratios and market share. (see Table 27.1) How Advertising Works We dug deeper into the data to better understand how the ad was effective.
When things are going bad you really have to spend. If you neglect to Namibia Phone Number List accelerate, you can really lose a lot. What can be learned from marketers taking a more proactive position? What is happening to their market share and profitability? A series of joint studies conducted by the Oglivy R&D center and the Strategic Planning Institute provide some answers to these questions. These studies all used the unique PIMS database. This section is based on empirical studies conducted by these two institutions. PIMS(profit impact of market strategy). PIMS is the only database that contains both marketing and financial information for the same company. At the time of this review, the database contained 4 years of data for each of 749 businesses. These businesses included manufacturers of durable and non-durable consumer goods as well as service institutions. These businesses were located in North America and Europe. Businesses with large market shares contributed data, as did companies with small market shares.
Contribution of Advertising to Market Share/Profitability The first issue that needs to be examined is the contribution of advertising expenditures to market share and profitability - under normal conditions; because this creates the necessary framework for analyzing the impact of the crisis. More specifically, does it pay off for a marketer to spend money on advertising under all circumstances? This is the most critical starting point today, when many marketers question the value of advertising and turn to promotions and other marketing stimuli. The first study focused on 749 businesses included in PIMS. In order to measure the contribution of advertising, a 'spend measurement' was required. To eliminate the brand size effect (i.e., larger brands spending more than smaller ones), it was decided to compare the ratio of advertising to sales with those of competitors. This allowed businesses to be divided into five groups by comparing their "ad/sales" ratios with their competitors' ratios. The research clearly shows the connection between "advertising/sales" ratios and market share. (see Table 27.1) How Advertising Works We dug deeper into the data to better understand how the ad was effective.