CMN3174 Chapter Notes - Chapter 0: Product Differentiation, Operant Conditioning
Document Summary
The long-term impact of promotion and advertising on consumer choice (p. 248-250 and 259-260) Trade promotions account for 50% of billion budget of goods. 70% of firms increased trade promotions between 1990-1995. 8-15% loss of shares blame couponing and promotions for reduced brand loyalty. Consumers that buy only well-known brands from 77% in 1975 to 62% in. Terms: short-term effects: immediate effect of ad on sales (week by week, medium-term effects: 4-16 week time frame, long-term effects: effect on consumer"s brand choice behavior over several years (distributed lag model, effects of changes in marketing strategy. Theory #1 advertising leads to product differentiation, reducing consumer"s price sensitivity. Theory #2 advertising increases competition by providing info making them more price sensitive. Advertising can increase or decrease price elasticity (mitra/lynch) If you do not include the price on the ad, the consumer"s price sensitivity drops. Long-term impact of ads on price sensitivity is stronger for non-loyal consumers than loyal ones.
