Brand Performance Volatility from Marketing Spending
نویسندگان
چکیده
While volatile marketing spending, as opposed to even-level spending, may improve a brand’s financial performance, it can also increase the volatility of performance, which is not a desirable outcome. This paper analyzes how revenue and cash-flow volatility are influenced by own and competitive marketing spending volatility, by the level of marketing spending, by the responsiveness to own marketing spending, and by competitive response. From market response theory, the authors derive propositions about the influence of these variables on revenue and cash-flow volatility. In addition, they extend the Dorfman-Steiner theorem to derive the optimal level and volatility of expenditures if volatility effects are taken into account. Based on a large sample of 99 pharmaceutical brands in four clinical categories and four European countries, the authors test for the empirical relevance of the propositions and assess the magnitude of the different sources of marketing-induced performance volatility. The authors find broad support for the predicted volatility effects. Volatility elasticities are significant and may be as large as 1.10 for cash-flow variance with respect to marketing responsiveness. The findings imply that common volatility-increasing marketing practices such as price promotions or volatile advertising plans may be effective at the top-line, but could turn out to be ineffective after all costs are taken into account. Optimal marketing volatility needs to tradeoff sales effectiveness and extra costs due to marketing volatility.
منابع مشابه
Brand Performance Volatility Arising from Marketing Spending Behavior under Competition
While volatile marketing spending, as opposed to even-level spending, may improve a brand’s financial performance, it can also increase the volatility of performance, which is not a desirable outcome. This paper analyzes how revenue and cash-flow volatility are influenced by own and competitive marketing spending volatility, by the level of marketing spending, by the responsiveness of own marke...
متن کاملMarketing Spending and the Volatility of Revenues and Cash Flows
While effective marketing spending is known to improve a brand’s financial performance, it can also increase the volatility of performance, which is not a desirable outcome. This paper analyzes how revenue and cash-flow volatility are influenced by own and competitive marketing spending volatility, by the level of marketing spending, by the effectiveness of own and competitive marketing spendin...
متن کاملMarketing Innovation and Brand Performance of Superior Pharmaceutical Companies in 2017: A Descriptive Study
Background and Objectives: Lack of attention to marketing innovation for achieving competitive advantage leads to pharmaceutical brands performance decline. In this regard, the purpose of the present research was to determine the relationship between marketing innovation and market performance of pharmaceutical brands. Materials and Methods: In this descriptive study, statistical population in...
متن کاملPerformance growth and opportunistic marketing spending
Article history: First received on November 5, 2014 and was under review for 51⁄2 months Available online xxxx Area Editor: Sunil Gupta Marketing executives are under pressure to produce revenue and profit growth for their brands. In most cases that involve requesting gradually higher marketing budgets, which is expensive, especially considering the known diminishing return effects of marketing...
متن کاملNeil A . Morgan & Lopo L . Rego Brand Portfolio Strategy and Firm Performance
Most large firms operating in consumer markets own and market more than one brand (i.e., they have a brand portfolio). Although firms make corporate-level strategic decisions regarding their brand portfolio, little is known about whether and how a firm’s brand portfolio strategy is linked to its business performance. Using data from the American Customer Satisfaction Index and other secondary s...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید
ثبت ناماگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید
ورودعنوان ژورنال:
- Management Science
دوره 62 شماره
صفحات -
تاریخ انتشار 2016