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The Persistence of Marketing Effects on Sales

Author

Listed:
  • Marnik G. Dekimpe

    (Catholic University Leuven)

  • Dominique M. Hanssens

    (University of California, Los Angeles)

Abstract

Are marketing efforts able to affect long-term trends in sales or other performance measures? Answering this question is essential for the creation of marketing strategies that deliver a sustainable competitive advantage. This paper introduces persistence modeling to derive long-term marketing effectiveness from time-series observations on sales and marketing expenditures. First, we use unit-root tests to determine whether sales are stable or evolving (trending) over time. If they are evolving, we examine how strong this evolution is (univariate persistence) and to what extent it can be related to marketing activity (multivariate persistence). An empirical example on sales and media spending for a chain of home-improvement stores reveals that some, but not all, advertising has strong trend-setting effects on sales. We argue that traditional modeling approaches would not pick up these effects and, therefore, seriously underestimate the long-term effectiveness of advertising. The paper concludes with an agenda for future empirical research on long-run marketing effectiveness.

Suggested Citation

  • Marnik G. Dekimpe & Dominique M. Hanssens, 1995. "The Persistence of Marketing Effects on Sales," Marketing Science, INFORMS, vol. 14(1), pages 1-21.
  • Handle: RePEc:inm:ormksc:v:14:y:1995:i:1:p:1-21
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    File URL: http://dx.doi.org/10.1287/mksc.14.1.1
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    References listed on IDEAS

    as
    1. Hauser, John R. & Urban, Glen L., 1975. "A normative methodology for modeling consumer response to innovation," Working papers 785-75., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    2. Griffin, Abbie. & Hauser, John R., 1991. "The marketing and R & D interface," Working papers #48-91. Working paper (Sl, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    3. Green, Paul E & Srinivasan, V, 1978. " Conjoint Analysis in Consumer Research: Issues and Outlook," Journal of Consumer Research, Oxford University Press, pages 103-123.
    4. George P. Huber, 1974. "Multi-Attribute Utility Models: A Review of Field and Field-Like Studies," Management Science, INFORMS, pages 1393-1402.
    5. Hauser, John R. & Urban, Glen L., 1976. "A normative methodology for modeling consumer response to innovation," Working papers 854-76., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. John R. Hauser, 1977. "Testing the Accuracy," Discussion Papers 286, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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