More than a billion dollars is spent annually on generic advertisements that promote the consumption of commodity goods. Generic advertising is designed to increase primary demand, or the “size of the pie,” without affecting selective demand, or the “share of the pie.” We find evidence to the contrary—generic advertising increases the consumer’s sensitivity to changes in price and systematically alters brand preferences. These effects of generic advertising can be attributed to the tendency of generic ads to change the relative importance of the attributes used to evaluate the brands. The results have implications for the public policy issue of how to effectively implement generic advertising without differentially benefiting certain brands and the managerial issue of how to integrate generic and brand advertising in order to achieve product category and brand differentiation goals
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