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Building Brands

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  • M. Berk Ataman

    (Rotterdam School of Management, Erasmus University, 3000 DR Rotterdam, The Netherlands)

  • Carl F. Mela

    (Fuqua Business School, Duke University, Durham, North Carolina 27708)

  • Harald J. van Heerde

    (Waikato Management School, University of Waikato, Hamilton 3240, New Zealand, and CentER, Tilburg University, 5000 LE Tilburg, The Netherlands)

Abstract

Which marketing strategies are most effective for introducing new brands? This paper sheds light on this question by ascribing growth performance to firms' postlaunch marketing choices. We decompose the success of a new brand into its ultimate market potential and the rate at which it achieves this potential. To achieve this aim we formulate a Bayesian dynamic linear model (DLM) of repeat purchase diffusion wherein growth and market potential are directly linked to the new brand's long-term advertising, promotion, distribution, and product strategy. We perform the analysis on 225 new-brand introductions across 22 repeat-purchase product categories over five years to develop generalized findings about the correlates of new-brand success. We find that access to distribution breadth plays the greatest role in the success of a new brand, and that investments in distribution and product innovation lead to greater marginal increases in sales for new brands than either discounting, feature/display, or advertising. Moreover, distribution interacts with other strategies to enhance their effectiveness. These findings underscore the utility of extending marketing mix models of new-brand performance to include product and distribution decisions.

Suggested Citation

  • M. Berk Ataman & Carl F. Mela & Harald J. van Heerde, 2008. "Building Brands," Marketing Science, INFORMS, vol. 27(6), pages 1036-1054, 11-12.
    • Handle: RePEc:inm:ormksc:v:27:y:2008:i:6:p:1036-1054
    DOI: 10.1287/mksc.1080.0358
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