How Dynamic Consumer Response, Competitor Response, Company Support, and Company Inertia Shape Long-Term Marketing Effectiveness

Koen Pauwels ()
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Koen Pauwels: Tuck School of Business, Dartmouth University, Hanover, New Hampshire 03755

Marketing Science, 2004, vol. 23, issue 4, 596-610

Abstract: Long-term marketing effectiveness is a high-priority research topic for managers, and emerges from the complex interplay among dynamic reactions of several market players. This paper introduces restricted policy simulations to distinguish four dynamic forces: consumer response, competitor response, company inertia, and company support. A rich marketing dataset allows the analysis of price, display, feature, advertising, and product-line extensions. The first finding is that consumer response differs significantly from the net effectiveness of product-line extensions, price, feature, and advertising. In particular, net sales effects are stronger and longer-lasting than consumer response. Second, this difference is not due to competitor response, but to company action. For tactical actions (price and feature), it takes the form of , as promotions last for several weeks. For strategic actions (advertising and product-line extensions), by other marketing instruments greatly enhances dynamic consumer response. This company action negates the postpromotion dip in consumer response, and enhances the long-term sales benefits of product-line extensions, feature, and advertising. Therefore, managers are urged to evaluate company decision rules for inertia and support when assessing long-term marketing effectiveness.

Keywords: long-term marketing effectiveness; dynamic consumer and competitor response; company inertia and support; vector autoregressive (VAR) models; impulse-response functions; policy simulation restrictions; postpromotion dip (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (46)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:23:y:2004:i:4:p:596-610

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