IDEAS home Printed from https://ideas.repec.org/a/eee/jouret/v92y2016i3p352-372.html
   My bibliography  Save this article

Advertising Effects Under Consumer Heterogeneity – The Moderating Role of Brand Experience, Advertising Recall and Attitude

Author

Listed:
  • Zenetti, German
  • Klapper, Daniel

Abstract

Measuring the effects of advertising on consumers’ purchase decisions is an important yet difficult task in retailing because the effect can depend on both current and past advertising efforts and on the co-occurrence of other marketing instruments. Consumers may have different evaluations and preferences for advertising that can determine its effectiveness, and these can change over time based on factors such as recall of and attitude toward advertisements. The proposed econometric framework examines the purchase decisions of potentially heterogeneous consumers by means of the widely used random coefficient logit model for aggregate sales and information about perceptions of advertising at the consumer level, that is, tracking data. These tracking data assess individual responses to two consumer metrics that are related to consumers’ (I) recent experience with the consumption of the brand and (II) recall and appreciation of advertisements. The empirical application indicates that both consumer metrics and heterogeneity can be important for retailing researchers and managers by revealing the effects of advertising and determining the influence of other marketing instruments, such as price.

Suggested Citation

  • Zenetti, German & Klapper, Daniel, 2016. "Advertising Effects Under Consumer Heterogeneity – The Moderating Role of Brand Experience, Advertising Recall and Attitude," Journal of Retailing, Elsevier, vol. 92(3), pages 352-372.
  • Handle: RePEc:eee:jouret:v:92:y:2016:i:3:p:352-372
    DOI: 10.1016/j.jretai.2016.02.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022435916000051
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jretai.2016.02.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wu, De-Min, 1973. "Alternative Tests of Independence Between Stochastic Regressors and Disturbances," Econometrica, Econometric Society, vol. 41(4), pages 733-750, July.
    2. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    3. Jean‐Pierre Dubé & Jeremy T. Fox & Che‐Lin Su, 2012. "Improving the Numerical Performance of Static and Dynamic Aggregate Discrete Choice Random Coefficients Demand Estimation," Econometrica, Econometric Society, vol. 80(5), pages 2231-2267, September.
    4. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    5. Jiang, Renna & Manchanda, Puneet & Rossi, Peter E., 2009. "Bayesian analysis of random coefficient logit models using aggregate data," Journal of Econometrics, Elsevier, vol. 149(2), pages 136-148, April.
    6. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 239-253.
    7. Pradeep K. Chintagunta & Harikesh S. Nair, 2011. "Structural Workshop Paper --Discrete-Choice Models of Consumer Demand in Marketing," Marketing Science, INFORMS, vol. 30(6), pages 977-996, November.
    8. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    9. Peter Doyle & John Saunders, 1990. "Multiproduct Advertising Budgeting," Marketing Science, INFORMS, vol. 9(2), pages 97-113.
    10. Wildner Raimund & Modenbach Guido, 2015. "The Long-Term ROI of TV Advertising in a Digital World," GfK Marketing Intelligence Review, Sciendo, vol. 7(1), pages 54-60, May.
    11. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    12. Jean‐Pierre Dubé & Günter J. Hitsch & Peter E. Rossi, 2010. "State dependence and alternative explanations for consumer inertia," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 417-445, September.
    13. German Zenetti & Thomas Otter, 2014. "Bayesian estimation of the random coefficients logit from aggregate count data," Quantitative Marketing and Economics (QME), Springer, vol. 12(1), pages 43-84, March.
    14. Lakshman Krishnamurthi & S. P. Raj, 1991. "An Empirical Analysis of the Relationship Between Brand Loyalty and Consumer Price Elasticity," Marketing Science, INFORMS, vol. 10(2), pages 172-183.
    15. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    16. P. De Pelsmacker & M. Geuens & P. Anckaert, 2002. "Media context and advertising effectiveness: The role of context appreciation and context-ad similarity," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/162, Ghent University, Faculty of Economics and Business Administration.
    17. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, October.
    18. Wright, Alice A & Lynch, John G, Jr, 1995. "Communication Effects of Advertising versus Direct Experience When Both Search and Experience Attributes Are Present," Journal of Consumer Research, Oxford University Press, vol. 21(4), pages 708-718, March.
    19. Peter M. Guadagni & John D. C. Little, 1983. "A Logit Model of Brand Choice Calibrated on Scanner Data," Marketing Science, INFORMS, vol. 2(3), pages 203-238.
    20. Danaher, Peter J. & Mullarkey, Guy W., 2003. "Factors Affecting Online Advertising Recall: A Study of Students," Journal of Advertising Research, Cambridge University Press, vol. 43(3), pages 252-267, September.
    21. Bhat, Chandra R., 2001. "Quasi-random maximum simulated likelihood estimation of the mixed multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 677-693, August.
    22. Leslie G. Godfrey, 1999. "Instrument Relevance in Multivariate Linear Models," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 550-552, August.
    23. Tülin Erdem & Michael P. Keane, 1996. "Decision-Making Under Uncertainty: Capturing Dynamic Brand Choice Processes in Turbulent Consumer Goods Markets," Marketing Science, INFORMS, vol. 15(1), pages 1-20.
    24. Morwitz, Vicki G & Johnson, Eric J & Schmittlein, David C, 1993. "Does Measuring Intent Change Behavior?," Journal of Consumer Research, Oxford University Press, vol. 20(1), pages 46-61, June.
    25. David Hensher, 2001. "The valuation of commuter travel time savings for car drivers: evaluating alternative model specifications," Transportation, Springer, vol. 28(2), pages 101-118, May.
    26. Batra, Rajeev & Ray, Michael L, 1986. "Affective Responses Mediating Acceptance of Advertising," Journal of Consumer Research, Oxford University Press, vol. 13(2), pages 234-249, September.
    27. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    28. Rojas-Mã‰Ndez, Jos㉠I. & Davies, Gary, 2005. "Avoiding Television Advertising: Some Explanations from Time Allocation Theory," Journal of Advertising Research, Cambridge University Press, vol. 45(1), pages 34-48, March.
    29. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    30. Michelle Sovinsky Goeree, 2008. "Limited Information and Advertising in the U.S. Personal Computer Industry," Econometrica, Econometric Society, vol. 76(5), pages 1017-1074, September.
    31. John Shea, 1997. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 348-352, May.
    32. Dholakia, Utpal M & Morwitz, Vicki G, 2002. "The Scope and Persistence of Mere-Measurement Effects: Evidence from a Field Study of Customer Satisfaction Measurement," Journal of Consumer Research, Oxford University Press, vol. 29(2), pages 159-167, September.
    33. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    34. Jean-Pierre Dubé & Günter Hitsch & Puneet Manchanda, 2005. "An Empirical Model of Advertising Dynamics," Quantitative Marketing and Economics (QME), Springer, vol. 3(2), pages 107-144, June.
    35. Andrews, Donald W. K. & Lu, Biao, 2001. "Consistent model and moment selection procedures for GMM estimation with application to dynamic panel data models," Journal of Econometrics, Elsevier, vol. 101(1), pages 123-164, March.
    36. Dominique M. Hanssens & Koen H. Pauwels & Shuba Srinivasan & Marc Vanhuele & Gokhan Yildirim, 2014. "Consumer Attitude Metrics for Guiding Marketing Mix Decisions," Marketing Science, INFORMS, vol. 33(4), pages 534-550, July.
    37. Frank M. Bass & Norris Bruce & Sumit Majumdar & B. P. S. Murthi, 2007. "Wearout Effects of Different Advertising Themes: A Dynamic Bayesian Model of the Advertising-Sales Relationship," Marketing Science, INFORMS, vol. 26(2), pages 179-195, 03-04.
    38. Andrés Musalem & Eric T. Bradlow & Jagmohan S. Raju, 2009. "Bayesian estimation of random‐coefficients choice models using aggregate data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(3), pages 490-516, April.
    39. Marc Vanhuele & Shuba Srinivasan & Koen Pauwels, 2010. "Mindset Metrics in Market Response Models: An Integrative Approach," Post-Print hal-00528411, HAL.
    40. Hoch, Stephen J & Ha, Young-Won, 1986. "Consumer Learning: Advertising and the Ambiguity of Product Experience," Journal of Consumer Research, Oxford University Press, vol. 13(2), pages 221-233, September.
    41. Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 28, pages 1701-1844, Elsevier.
    42. Pradeep K. Chintagunta & Vrinda Kadiyali & Naufel J. Vilcassim, 2006. "Endogeneity and Simultaneity in Competitive Pricing and Advertising: A Logit Demand Analysis," The Journal of Business, University of Chicago Press, vol. 79(6), pages 2761-2788, November.
    43. J. Miguel Villas-Boas & Russell S. Winer, 1999. "Endogeneity in Brand Choice Models," Management Science, INFORMS, vol. 45(10), pages 1324-1338, October.
    44. Greg M. Allenby & Mark J. Garratt & Peter E. Rossi, 2010. "A Model for Trade-Up and Change in Considered Brands," Marketing Science, INFORMS, vol. 29(1), pages 40-56, 01-02.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baudier, Patricia & Ammi, Chantal & Hikkerova, Lubica, 2022. "Impact of advertising on users’ perceptions regarding the Internet of things," Journal of Business Research, Elsevier, vol. 141(C), pages 355-366.
    2. Sharifi, Mehdi & Khazaei Pool, Javad & Jalilvand, Mohammad Reza & Tabaeeian, Reihaneh Alsadat & Ghanbarpour Jooybari, Mohsen, 2019. "Forecasting of advertising effectiveness for renewable energy technologies: A neural network analysis," Technological Forecasting and Social Change, Elsevier, vol. 143(C), pages 154-161.
    3. Kurtmollaiev, Seidali & Lervik-Olsen, Line & Andreassen, Tor W., 2022. "Competing through innovation: Let the customer judge!," Journal of Business Research, Elsevier, vol. 153(C), pages 87-101.
    4. Haiqing Hu & Pandu R. Tadikamalla, 2020. "When to launch a sales promotion for online fashion products? An empirical study," Electronic Commerce Research, Springer, vol. 20(4), pages 737-756, December.
    5. Uldemolins, Pilar & Maza, María T. & Aldama, Sara, 2020. "Consumer Perceptions of a Lamb Meat Communication Campaign: A Qualitative Study," Journal of Food Distribution Research, Food Distribution Research Society, vol. 51(3), November.
    6. Muhammad Waqas & Zalfa Laili Binti Hamzah & Noor Akma Mohd Salleh, 2021. "Customer experience: a systematic literature review and consumer culture theory-based conceptualisation," Management Review Quarterly, Springer, vol. 71(1), pages 135-176, February.
    7. Jana Jaďuďová & Iveta Marková & Emília Hroncová & Jana Hroncová Vicianová, 2018. "An Assessment of Regional Sustainability through Quality Labels for Small Farmers’ Products: A Slovak Case Study," Sustainability, MDPI, vol. 10(4), pages 1-16, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Draganska, Michaela & Klapper, Daniel, 2010. "Choice Set Heterogeneity and the Role of Advertising: An Analysis with Micro and Macro Data," Research Papers 2063, Stanford University, Graduate School of Business.
    2. German Zenetti & Thomas Otter, 2014. "Bayesian estimation of the random coefficients logit from aggregate count data," Quantitative Marketing and Economics (QME), Springer, vol. 12(1), pages 43-84, March.
    3. Guhl, Daniel, 2019. "Addressing endogeneity in aggregate logit models with time-varying parameters for optimal retail-pricing," European Journal of Operational Research, Elsevier, vol. 277(2), pages 684-698.
    4. Guilhem Bascle, 2008. "Controlling for endogeneity with instrumental variables in strategic management research," Post-Print hal-00576795, HAL.
    5. Kaiser, Ulrich & Mendez, Susan J. & Rønde, Thomas & Ullrich, Hannes, 2014. "Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark," Journal of Health Economics, Elsevier, vol. 36(C), pages 174-187.
    6. Oliver J. Rutz & George F. Watson, 2019. "Endogeneity and marketing strategy research: an overview," Journal of the Academy of Marketing Science, Springer, vol. 47(3), pages 479-498, May.
    7. Reynaert, Mathias & Verboven, Frank, 2014. "Improving the performance of random coefficients demand models: The role of optimal instruments," Journal of Econometrics, Elsevier, vol. 179(1), pages 83-98.
    8. Sungho Park & Sachin Gupta, 2012. "Comparison of SML and GMM estimators for the random coefficient logit model using aggregate data," Empirical Economics, Springer, vol. 43(3), pages 1353-1372, December.
    9. Yonezawa, Koichi & Richards, Timothy J., 2016. "Competitive Package Size Decisions," Journal of Retailing, Elsevier, vol. 92(4), pages 445-469.
    10. Haghani, Milad & Bliemer, Michiel C.J. & Hensher, David A., 2021. "The landscape of econometric discrete choice modelling research," Journal of choice modelling, Elsevier, vol. 40(C).
    11. Lakka, Spyridoula & Michalakelis, Christos & Varoutas, Dimitris & Martakos, Draculis, 2012. "Exploring the determinants of the OSS market potential: The case of the Apache web server," Telecommunications Policy, Elsevier, vol. 36(1), pages 51-68.
    12. Sun, Yutec & Ishihara, Masakazu, 2019. "A computationally efficient fixed point approach to dynamic structural demand estimation," Journal of Econometrics, Elsevier, vol. 208(2), pages 563-584.
    13. Michael P. Keane, 2013. "Panel data discrete choice models of consumer demand," Economics Papers 2013-W08, Economics Group, Nuffield College, University of Oxford.
    14. Allender, William J. & Richards, Timothy J., 2009. "Measures of Brand Loyalty," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49536, Agricultural and Applied Economics Association.
    15. Nathan H. Miller, 2008. "Competition When Consumers Value Firm Scope," EAG Discussions Papers 200807, Department of Justice, Antitrust Division.
    16. Asadul Islam & Dietrich K. Fausten, 2008. "Skilled Immigration and Wages in Australia," The Economic Record, The Economic Society of Australia, vol. 84(s1), pages 66-82, September.
    17. Doko Tchatoka, Firmin Sabro, 2012. "Specification Tests with Weak and Invalid Instruments," MPRA Paper 40185, University Library of Munich, Germany.
    18. Steven T. Berry & Philip A. Haile, 2021. "Foundations of Demand Estimation," Cowles Foundation Discussion Papers 2301, Cowles Foundation for Research in Economics, Yale University.
    19. Woutersen, Tiemen & Hausman, Jerry A., 2019. "Increasing the power of specification tests," Journal of Econometrics, Elsevier, vol. 211(1), pages 166-175.
    20. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jouret:v:92:y:2016:i:3:p:352-372. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.