Growing Small Brands: Does a Brand’s Equity and Growth Potential Affect Its Long-term Marketing Productivity?

Managers often hope to obtain long-term benefits with temporary marketing actions, especially for brands that are currently small. However, academic research implies their chances are slim: fewer than 5% of marketing actions generate permanent sales effects. Yet extant research has examined brands with similar characteristics, thus implicitly assuming that the brand itself carries no influence over whether its marketing actions attain long-term sales effects. In contrast, recent studies in marketing strategy show that the resources available to a brand influence the returns to its marketing mix actions. Therefore, we argue that brand-specific resources and characteristics will influence the permanent and cumulative effects of their marketing actions. Using panel data for 7 years from 43 brands in three product categories, we employ a two-stage approach in which we first estimate the long-term marketing effectiveness with persistence modeling, and then relate those effectiveness estimates to brand-specific resources. Overall, results indicate that long-term marketing productivity is higher for brands with higher equity and for brands with greater potential for growth (i.e., lower market share, narrower product line, or more new product introductions). These results offer new insight into the potential for long-run marketing effectiveness.