Multiattribute perceptual mapping with idiosyncratic brand and attribute sets

This article proposes an extremely flexible procedure for perceptual mapping based on multiattribute ratings, such that the respondent freely generates sets of both brands and attributes. Therefore, the brands and attributes are known and relevant to each participant. Collecting and analyzing such idiosyncratic datasets can be challenging. Therefore, this study proposes a modification of generalized canonical correlation analysis to support the analysis of the complex data structure. The model results in a common perceptual map with subject-specific and overall fit measures. An experimental study compares the proposed procedure with alternative approaches using predetermined sets of brands and/or attributes. In the proposed procedure, brands are better known, attributes appear more relevant, and the respondent's burden is lower. The positions of brands in the new perceptual map differ from those obtained when using fixed brand sets. Moreover, the new procedure typically yields positioning information on more brands. An empirical study on positioning of shoe stores illustrates our procedure and resulting insights. Finally, the authors discuss limitations, potential application areas, and directions for research

Effect of business cycle fluctuations on private-label share: what has marketing conduct got to do with it?

The authors investigate whether, and to what extent, marketing conduct varies over the business cycle, and how this contributes to the growing popularity of private labels. To address this, a unique dataset is examined that combines a broad set of seven marketing-mix instruments with private-label share, using data covering two decades for 106 consumer-packaged-goods categories in the U.S. The results show that private-label share behaves counter-cyclically, and that part of the boost in private-label share during contractions is permanent. Retailers’ observed practice of supporting their own labels in contractions while cutting back in expansion periods helps this cyclical sensitivity even further. Also national brands’ pro-cyclical behavior in terms of (i) major new-product introductions, (ii) advertising, and (iii) their promotional pressure relative to private labels, is associated with more pronounced cyclical fluctuations in private-label share, and even with permanent private-label market-share gains. While brand managers cannot be held responsible for the occurrence of economic downswings, they can be held accountable for how much contractions help strengthen their fiercest competitor, the store brands owned by their very customers.status: publishe

Effect of business cycle fluctuations on private-label share: what has marketing conduct got to do with it?

The authors investigate whether, and to what extent, marketing conduct varies over the business cycle, and how this contributes to the growing popularity of private labels. To address this, a unique dataset is examined that combines a broad set of seven marketing-mix instruments with private-label share, using data covering two decades for 106 consumer-packaged-goods categories in the U.S. The results show that private-label share behaves counter-cyclically, and that part of the boost in private-label share during contractions is permanent. Retailers’ observed practice of supporting their own labels in contractions while cutting back in expansion periods helps this cyclical sensitivity even further. Also national brands’ pro-cyclical behavior in terms of (i) major new-product introductions, (ii) advertising, and (iii) their promotional pressure relative to private labels, is associated with more pronounced cyclical fluctuations in private-label share, and even with permanent private-label market-share gains. While brand managers cannot be held responsible for the occurrence of economic downswings, they can be held accountable for how much contractions help strengthen their fiercest competitor, the store brands owned by their very customers.status: publishe

How business cycles contribute to private-label success: Evidence from the United States and Europe

The growth of private labels over the past decades has been attributed to various factors. This article formally addresses the link between private-label success and economic expansions and contractions using recently developed time-series/econometric techniques. The findings confirm conventional wisdom that a country's private-label share increases when the economy is suffering and shrinks when the economy is flourishing. However, asymmetries are found in the extent to and speed with which private-label share changes in cyclical up- versus downturns. Consumers switch more extensively to store brands during bad economic times than they switch back to national brands in a subsequent recovery. In addition, the switch to private-label brands is faster than the opposite movement to national brands after the recession ends. Finally, not only are consumers more prone to buy private labels during economic downturns, but some keep buying them when bad economic times are long over as well, leaving permanent "scars" on national brands' performance level. The authors argue that national-brand manufacturers can mitigate the effect of an economic downturn on their shares by intensifying their marketing-support activities in recessions. Such a proactive strategy is not often observed. On the contrary, available evidence suggests that many manufacturers exacerbate their predicament by cutting back on their marketing expenses when the economy turns sour. Most retailers invest more strongly in their private-label program when the economy deteriorates, making it even more difficult for national brands to catch up with the share lost during contractions.status: publishe

New product success in the consumer packaged goods industry: A shopper marketing approach

Marketing activities that influence shoppers along the various stages of their path-to-purchase are gaining attention from both manufacturers and retailers. Using a dataset with detailed information on 105 new products (NPs) launched in the U.K. by 44 leading brands and sold across 13 major retail banners, we provide strong support for the prominent role of both upper- and lower-funnel marketing actions that influence consumers before (upper) or during (lower) their shopping trip. We show which of these shopper-marketing instruments have the largest effect on NP performance at a retailer, and whether and how their effect is moderated by the retailer’s store context. When it comes to NP success, the lifeblood of CPG companies, the lower-funnel marketing actions targeting shoppers directly at the point-of-purchase predominantly decide your fate. Thus, manufacturers should work ever harder to collaborate with retailers and push the store-specific shopper-marketing instruments in a favorable direction through information sharing and tailoring of their marketing program to individual retailers. Indeed, not all news is bleak for brand manufacturers. We identify five pieces of good news that brand manufacturers can use to their advantage.status: publishe

The role of national culture in advertising’s sensitivity to business cycles: An investigation across continents

Cutting advertising budgets has traditionally been a popular reaction by companies around the globe when faced with a slacking economy. Still, anecdotal evidence suggests the presence of considerable cross-country variability in the cyclical sensitivity of advertising expenditures. We conduct a systematic investigation into the cyclical sensitivity of advertising expenditures in 37 countries across all continents, covering up to 25 years and four key media: magazines, newspapers, radio and television. While our findings confirm that advertising moves in the same direction as the general economic activity, we also show that advertising is considerably more sensitive to business-cycle fluctuations than the economy as a whole, with an average co-movement elasticity of 1.4. Interestingly, advertising's cyclical dependence is systematically related to the cultural context in which companies operate. Advertising behaves less cyclically in countries high on long-term orientation and power distance, while advertising is more cyclical in countries high on uncertainty avoidance. Further, advertising is more sensitive to the business cycle in countries characterized by significant stock-market pressure and few foreign-owned multinationals. These results have important strategic implications for both global advertisers and their ad agencies.status: publishe

Dancing with a giant: The effect of Wal-Mart’s entry into the U.K. on European retailing

The authors examine the value-destroying and value-enhancing effects of a giant player’s foreign entry on incumbents operating in that region. They use Wal-Mart’s entry into the United Kingdom, through its acquisition of Asda, as the empirical context. Drawing on the marketing, strategy, and finance literature streams, the authors develop hypotheses as to why some incumbents are negatively affected whereas others actually may benefit from the entry of a giant competitor. Their measure of performance impact is the change in shareholder value around the announcement date, which has recently been recognized as an important metric to evaluate the effectiveness of marketing actions. The authors find strong support for the conceptual model, which distinguishes between the seriousness of the threat to the incumbents and their capacity to withstand the threat. The authors validate their findings using three alternative measures of company performance: percentage growth in the incumbent retailer’s sales, earnings before interest and taxes, and return on assets between 1998 (the year before the Asda takeover) and 2002 (three years after the takeover). The authors discuss various managerial implications of their results. By acting proactively, incumbents can mitigate the negative performance consequences, while maximally benefiting from the positive implications of a giant competitor’s entry.status: publishe

Advertising and price effectiveness over the business cycle

In this study, the authors conduct a systematic investigation on the evolution in the effectiveness of two important marketing mix instruments, advertising and price, over the business cycle. Analyses are based on 163 branded products in 37 mature CPG categories in the UK, and this for a period of 15 years. The data are a combination of (i) monthly national sales data, (ii) monthly advertising data, (iii) data on the general economic conditions, and (iv) consumer survey data. Consumers are shown to be more price sensitive during contractions. In addition, spending patterns will be less consistent, implying smaller brand loyalty. Advertising elasticities, however, do not seem to be affected by economic downturns. Product involvement was shown to be an influential moderator of the final effect of advertising, price and carry-over effects on sales. Finally, although short run effectiveness of price differs between expansions and contractions, the long run effectiveness of both advertising and price is not altered by differences in the general economic conditions.status: publishe

Dancing with a giant: The effect of Wal-Mart’s entry into the U.K. on the performance of European retailers

The authors examine the value-destroying and value-enhancing effects of a giant player's foreign entry on incumbents operating in that region. They use Wal-Mart's entry into the United Kingdom, through its acquisition of Asda, as the empirical context. Drawing on the marketing, strategy, and finance literature streams, the authors develop hypotheses as to why some incumbents are negatively affected whereas others actually may benefit from the entry of a giant competitor. Their measure of performance impact is the change in shareholder value around the announcement date, which has recently been recognized as an important metric to evaluate the effectiveness of marketing actions. The authors find strong support for the conceptual model, which distinguishes between the seriousness of the threat to the incumbents and their capacity to withstand the threat. The authors validate their findings using three alternative measures of company performance: percentage growth in the incumbent retailer's sales, earnings before interest and taxes, and return on assets between 1998 (the year before the Asda takeover) and 2002 (three years after the takeover). The authors discuss various managerial implications of their results. By acting proactively, incumbents can mitigate the negative performance consequences, while maximally benefiting from the positive implications of a giant competitor's entry. © 2008, American Marketing Association.status: publishe

Price and advertising effectiveness over the business cycle

Firms are under increasing pressure to justify their marketing expenditures. This evolution towards greater accountability is reinforced in harsh economic times when marketing budgets are among the first to be reconsidered. Such decisions require information whether, and to what extent, marketing’s effectiveness varies with the economic tide. However, there is surprisingly little research that addresses this issue. Therefore, we conduct a systematic investigation on the impact of the business cycle on the effectiveness of two important marketing instruments, price and advertising. To do so, we estimate time-varying short- and long-run advertising and price elasticities for 150 brands, across 36 CPG categories, based on 18 years of monthly U.K. data covering 1993-2010. The long-run price sensitivity tends to decrease during economic expansions, while long-run advertising elasticities increase. During contractions, the long-run own- and cross- price elasticities increase. Moreover, across the observation period, the short-run price elasticity has become significantly stronger. Finally, patterns are not the same across categories and brands, which offers opportunities for firms that know how to ride the economic tide.status: publishe