Do marketing expenditures to gain distribution cost the customer?

David Reibstein and Paul Farris

European Management Journal, 1995, vol. 13, issue 1, 31-38

Abstract: Most evaluations of marketing expenditures focus on the value of the marketing effort to the sponsoring organization (often the manufacturer or the distributor). This research concentrates on the impact of these efforts and expenditures on the ultimate customer. The direct question at hand is whether the marketing expenditures to gain distribution provide some positive benefit to the ultimate customer or is it rather a means of competing or enticing the customer to buy the product? Some have argued that the net effect of such expenditures is for the customer to be no better served and to be stuck paying a higher price than would otherwise have been the case. David Reibstein and Paul Farris demonstrate that quite the opposite can occur. In general, as demand and distribution increase, inter-store competition intensifies, lowering the retailers' margins, and possibly, lowering prices to the final consumer.

Date: 1995
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