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The Effect of Marketing Spending on Sales in the Premium Car Segment: New Evidence from Germany

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  • Crespo Cuaresma, Jesus

    ()
    (Vienna University of Economics and Business)

  • Stöckl, Matthias

    ()
    (University of Salzburg)

Abstract

This paper assesses empirically the relationship between marketing expenditures and sales in the premium car segment in Germany. We employ a new data-set which contains model-specific data on sales (i.e. registrations), restyling activities and marketing expenditures at a monthly basis for the years 1998 to 2007. The richness of our data in the time dimension allows for a systematic modeling of product life cycle effects which have been partly ignored in the existing empirical literature. We find a robust positive marketing-sales relationship, even after common characteristics of the product life cycle have been taken into account. Furthermore, our results indicate that the launching of a new model, face lifts and customized packages appear to exert a positive and sizeable effect on sales in the German premium car segment.

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Bibliographic Info

Paper provided by University of Salzburg in its series Working Papers in Economics and Finance with number 2012-2.

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Length: 26 pages
Date of creation: 14 Feb 2012
Date of revision:
Handle: RePEc:ris:sbgwpe:2012_002

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Keywords: Marketing expenditure; panel data models; automobile industry; premium car segment; automotive restyling;

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  1. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
  2. Prasad A. Naik & Ashutosh Prasad & Suresh P. Sethi, 2008. "Building Brand Awareness in Dynamic Oligopoly Markets," Management Science, INFORMS, vol. 54(1), pages 129-138, January.
  3. Robert H. Chenhall & Frank Moers, 2007. "The Issue of Endogeneity within Theory-Based, Quantitative Management Accounting Research," European Accounting Review, Taylor & Francis Journals, vol. 16(1), pages 173-196.
  4. Koen Pauwels & Imran Currim & Marnik Dekimpe & Dominique Hanssens & Natalie Mizik & Eric Ghysels & Prasad Naik, 2004. "Modeling Marketing Dynamics by Time Series Econometrics," Marketing Letters, Springer, vol. 15(4), pages 167-183, December.
  5. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  6. G. Dekimpe, Marnik & Hanssens, Dominique M. & Silva-Risso, Jorge M., 1998. "Long-run effects of price promotions in scanner markets," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 269-291, November.
  7. Ourania Notta & Kostas Oustapassidis, 2001. "Profitability and Media Advertising in Greek Food Manufacturing Industries," Review of Industrial Organization, Springer, vol. 18(1), pages 115-126, February.
  8. Amalia Yiannaka & Konstantinos Giannakas & Kien Tran, 2002. "Medium, message and advertising effectiveness in the Greek processed meats industry," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1757-1763.
  9. María Moral & Jordi Jaumandreu, 2007. "Automobile demand, model cycle and age effects," Spanish Economic Review, Springer, vol. 9(3), pages 193-218, September.
  10. Caroline Elliott, 2001. "A Cointegration Analysis of Advertising and Sales Data," Review of Industrial Organization, Springer, vol. 18(4), pages 417-426, June.
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