Effects of advertising on sales

Effects of advertising on sales Effects of Advertising on Sales: A Methodological Critique There is a reliable relationship between advertising and sales, but one in which sales lead advertising rather than vice versa Hsu, Darrat and Zhong (2002). This review focuses on a limited number of articles following Hsu, Darrat and Zhong from major journals in advertising and marketings thant focus on advertising and sales relationship Danaher, Bomefrer and Dhar, 2008; Esteve and Requena, 2006; Frank, Bruce and Majumdar, 2007; Kim, 2005; Leache and Reekie, 1996; Newstead, Taylor and Kennedy, 2009; Taylor, Kennedy and Sharp, 2009; Yoo and Mandhachitra, 2003; Zhou, Zhou and Ouyang, 2003. The first fragment of the paper discuss about the methodological oreintation and in the second portion it focuses on the argument whether there is any effect of advertising on sales. Methodological Orientaions Hsu, Darrat and Zhong (2002) tried to empirically examine the Gallbaraithian Hypothesis that advertising aggregate demand to the changing industrial development and consequently stimulates sales. (2002, p.175). To do so, they have chosen three aggregate variables wrapping from period of 1948 to 1995. The variables they selected are aggregate advertising expenditures (A) obtained from the Direct Marketing Associations Statistical Fact Book; aggregate sales (S) measured by personal consumption expenditures and obtained from the SP/DRI Database; and personal disposable income (I) culled from various issues of the Statistical Abstracts of the United States (2002, p.178). They have tested two competing hypothesis simultaneously using three variable vector autoregressive modeling procedure, which indicates that they have gone through a deductive approach of study.   Their methodology indicates that it is an empirical, quantitative and positivist study. Newstead, Taylor,   Kennedy and Sharp (2009) together brings out the knowledge through two different approaches that if advertising is to be slaes effective in the liong trm, it must firs work in short term and advertising typically as a half-life of three to four weeks. The two approaches they used are aggregate-level analysis from experimental split cable test marketing environments and individual-level (2009, p.207). Single-Source pannel date for 40 years have been collected and analysed. For individual-level analysis. Their approachess indicates that they were more into qualitative and interpretivist approach. Esteve and Requena (2006) tires to examine the relationship between advertising and sales across the market segments of the UK car industry over the period of 1971-2001 (total of 31 observations). The tired to figure out whether there is long-run stable equilibrium relaionship or not. The relationship between advertising and sales were both expressed in logarithms, using cointegration techniques (2006, p.114) Despite the relative small sample size, they used the Dynamic Ordinary Least Squares (DOLS) methods from stock and watson (1993) and following the methodology proposed by Shin (1994) (2006, p.118). They have also used the Model with Multiple structural Breaks to check whether the long-run advertising sales link is stable over time, proposed by Bai and Perron (1998, 2003a, 2003b). Few hypothesis were also st regarding the advertisment sales relationship which indicates that it is ia deductive approach and the methodlogy of the article suggested that it is a quantitative n positiv ist mode of study. Kim (2005)   investigate the advertising-sales relationship in the annual Lydia Pinkham data . Here the botstrap method is used as an alternative to the asympthotic method exclusively adopted by past studies. The orthogonalized impulse response analysis based on bivariate auto-regressive (AR) model is conducted (2005, p.348). Sample size of only 54 was   set   and the bootstrap method of Efron and Tibshirani (1993) was choosen. The articles doesnt discuss a proper methodolocial system which they have used, rather it is moreinto data details and estimation results. It is a quantitative and positivist aproach of study. Overall, this paper finds evidence of one-way causalty from advertising to sales. Zhou, Zhou and Ouyang (2005) further study the effect of short-term advertising on long-term sales of consumer durable and nondurables in China by cross-sectional times-series television advertising and sales data. This model is not only directional but also measures the quantitative magnitude of the persistence effect of specific variable (2005, p.47). Sales Data of 45 months from the retail stores were coverd.   Advertising data included television advertising expenditures covering all of the television channels in Shanghai (2005, p.48). This articles clearly outline the methodolgy and it is a quantitative positivist approach. (Bryman Bell, 2007)Yoo and Mandhachitra (2003) analysed the effects in a competitive setting. The longitudinal data on Scotch Whisky brands in thiland were choosen. The sample size was 90 and it was collected over a period of 7 hours 6 months. Sales data were obtained from the Excise Department of Thailand based on liquor taxes, and the monthly advertising spending data in print and broadcast media came from the AC Nielsen Media Monitoring Service and the Media Data Resources Inc. (2003, p.313) The SAS package was then used for analysis, and no serious multicollinearity was detected in the regression models. From the methodological system it is a quantitative positivist approach of study.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Leach and Reekie (1996) experimented on the relationship between sales and advertisement with petrol on the market share of brand . Market share of SASOL brand ws collected from their advertising agency   for eight years. The expenditure on advertising was collected from different conventional source of market research (1996, p.1082). with the hypothesis set before; advertising effect on sales; this indicates that it is a detuctive study and positivist quantitative study. Due to insufficient sales information there is a weakness in the study, though the article claims that it is not a such a deficiency.   Danaher, Bonfrer and Dhar (2008) further analysis the relationship of advertisiment and sales and took it into the next level by   including competitive advertising in their study. They have collected sales information from more than 80 grocery stores in a large marketi, in which information is collected by in-store scanner (2008, p.213). Danaher, bonfrer and Dhar specifically examine two categories; liquid laundry detergent and raisin bran cereals. This is because these items are considerd as the top most household product. Sales data from grocerry shops, advertising data from Arbitrons spot television commercial monitoring service and Broadcast Advertising Reports are taken(2008, p.217). For this study the research only considerd the Television adverisement data, which might lead to missconception because there are also other forms of media available for advertisement.   It is more into equation and statistical analysis which leads to quantitative research. Advertising Effect on Sales Hsu, Darrat and Zhong (2002) re-examine the Galbraithian hypothesis that advertising increases with disposible income and promotes sales, but the result for USA reject the Galbraithian hypothesis.   But unlike Chowdhurys bivrate results, their broader model suggest that there is a reliable relationship between advertising and sales. They also states that consumers view advertising as the companys way to conver confidence in their product. (2002, p.188). Whereas Newstead, Taylor,   Kennedy and Sharp found that advertisements work immediately and the strength of the effect verymuch influence the toal sales effect.   They also found an interesting point thet advertising exposure typically has a half life of three to four weeks (2009, p.210). Zhou, Zhou and Ouyang, concluded that longterm advertising have impacts on sales of consumer durable and nondurables. Yoo and Mandhachitra (2003) and Danaher, Bonfrer and Dhar (2008) both took it frther to competitive advertisment. Although a dvertisers have probably suspected that high levels of competitive interference reduce the effect of advertising on sales, until now, the magnitude of the reduction has not been quantified (2008, p. 222) their findings make contribution to three new areas of methodological, substantive and advertising practice. Esteve and Requena, (2006) observed substantial shift in the estimated coefficients of the long-run elasticity. In the last period, there was a notable rise in the long-run elasticity of advertising on sales. Leach and Reekie (1996) stated that sales are determined by past as well as current advertising expenditures, but that the cumulative effects of advertising lasts for months rather than years. Conclusion From most of the article it has been seen that they are positivistic, and quantitative research. It may be because to find out the relationship between Advertisement and sales, it requires statistical analysis. More or less every of the article concludes that advertising has effect on sales. Very few researches have been conducted regarding this area, which leaves opportunity for the potential researcher in this field. One of the other limitations of the study is the availability of data. It is hard to get the data based on the product category, and it is also that there are many types of advertisements available. Thus which advertisements actually affect the sales of the product is a question to be asked. As Hsu, Darrat and Zhong (2002, p.188) stated that from a broader model consistently suggest that there is a reliable relationship between advertising and sales, but one in which sales lead advertising rather than vice versa. Reference Bryman, A., Bell, E. (2007). Business Research Methods (Vol. 2). Oxford University Press. DANAHER, P. J., BONFRER, A., DHAR, S. (2008). The Effect of Competitive Advertising Interference on Sales for Packaged Goods. Journal of Marketing Research , XLV, 211-225. Esteve, V., Requena, F. (2006). A Cointegration Analysis of Car Advertising and Sales Data in the Presence of Structural Change. Int. J. of the Economics of Business , 13 (1), 111-128. Hsu, M. K., Darrat, A. F., Zhong, M., Abosedra, S. S. (2002). Does advertising stimulate sales or mainly deliver signals? A multivariate analysis. International Journal of Advertising , 175-195. Kim, H. J. (2005). Investigating the advertising-sales relationship in the Lydia Pinkham data: a bootstrap approach. Applied Economics (37), 347-354. LEACH, D. F., REEKIE, W. D. (1996). A natural experiment of the e ¤ ect of advertising on sales: the SASOL case. Applied Economics (28), 1081-1091. Newstead, K., Taylor, J., Kennedy, R., Sharp, B. (2009, June ). The Total Long-Term Sales Effects of Advertising: Lessons from Single Source. Journal of Advertising Research , 207-210. Yoo, B., Mandhachitra, R. (2003, September). Estimating Advertising Effects on Sales in a Competitive Setting. Journal of Advertising Research , 310-320. Zhou, N., Zhou, D., Ouyang, M. (2003). LONG-TERM EFFECTS OF TELEVISION ADVERTISING ON SALES OF CONSUMER DURABLES AND NONDURABLES. Journal of Advertising , 52 (2), 45-54. 7

Frito Lay Sun Chips Case Study Essay

1. How would you characterize the snack chip category and Frito-Lay’s competitive position in this category? The snack chip category is growing, mainly because of the increased per capita consumption, which rose from about 12 pounds in 1986 to nearly 14 pounds in 1990. The snack chip category consists of three types of competitors: national, regional and private brand firms. The market is very competitive and difficult; as many as 650 new products are introduced every year, but less than 1% of them generate more than $25 million in first-year sales. Frito-Lay is a national brand and a worldwide leader in the manufacturing and marketing of snack chips. Frito-Lay accounts for 13 percent of sales in the US snack food industry. Frito-Lay’s market share is 50% of the snack chips category, and and eight of its snack chips are among the top-10 best-selling chip items in US supermarkets. Furthermore, Doritos and Ruffles are the only snack chips with $1 billion in retail sales i n the world. 2. What specific challenges and risks does Frito-Lay face in marketing SunChips and what are the implications of each? The following are many of the specific challenges and risks that Frito-Lay faces in marketing SunChips and the implications of each: * There are a relatively large number of rivals > a lot of competition. * There is a large number of substitute brands/chips > a lot of competition. * Consumers are very price sensitive so brands are competing on price > detrimental. * There are a few barriers to entry, and existing entrants have better access to distribution channels than new ones. * Tried healthy snacks and failed > risky strategy. * New brand name is a departure from known name. * Cannibalization is a concern. * Frito Lay strategy: differentiator, line extensions, new products to address needs. 3. What insights can be drawn from Frito-Lay’s prior experience with multigrain snacks? As mentioned before, the snack chip market is incredibly competitive. With as many as 650 new products entering the product every year and less than 1% reaching a sustainable sales mark of $25 million, it is rare to find a successful one. Frito-Lay first toyed with multigrain snack chips in the 1970s, when research indicated a need for a snack in this category. Prontos, released in 1974 and distributed for four years, weren’t incredibly well received. While a lack of success is attributed to a confusing name, poor manufacturing and too narrow a market, Dwight Riskey, VP of Marketing Research and New Business, admits that he is â€Å"not sure there were dramatic things wrong with the product design [†¦]. It may have been invented and introduced before its time.† This sentiment was reflected in the Harvest Project in the early 1980s, when Frito-Lay developed several multigrain products to attempt and have a possible healthy alternative to saltier snack foods for the baby-boomer generation. Lackluster response caused the project to stall into the mid 80s as focus was put on developing new flavors and healthier alternatives in other brands. Development for the product now under the Sun Chips brand picked up in 1988. Consumer testing found a few variations of the Sun Chip that were perceived by test markets as both healthy and as â€Å"everyday snacks† — a factor necessary to the long term success of the snack. Ultimately, they had to wait until the right time to release the product. The market was slowly gaining health consciousness as baby-boomers matured and desired healthier alternatives to their snack foods. Early attempts were just that: too early. 4. What conclusions can be drawn from research on SunChips’ consumer acceptance and sales potential prior to the Minneapolis-St. Paul test market? The results from the premarket test were not at all what Frito-Lay’s executives had initially expected. Consumers preferred the SunChip name,while the most popular flavors were Natural and French Onion. After the trial, Sunchips had the potential to be an â€Å"everyday snack.† The results from the premarket test indicated that the Sun Chips Multigrain Snacks would sell a total sales volume of $113 million during it’s first year on the market. Included in this sales volume is a $22 million advertising and merchandising expenditure. That being said, $113 million far exceeds the $100 million sales performance goal for which Frito-Lay initially planned. There is also less potential for product cannibalism at 42%. The Minneapolis-St Paul, Minnesota metropolitan area was chosen because executives believed it to be a strong social and economic representation of the US as a whole. Generally speaking, this area also represented a standard environment in which consumer acceptance of products and competitive behavior both could be measured accurately. Ultimately, 2.2% of American households that eat these types of chips reside within this metropolitan area. Thus, according to the research on SunChips’ consumer acceptance and sales potential prior to the test market, it would be highly advised for Frito-Lay to continue exploration with this product, and proceed to more advanced stages of product testing. 5. What is your assessment of the SunChips’ test market results? Promotion/Advertising: As a result of the Premarket Test, Frito-Lay is allocating a $22 million advertising budget for Sun Chips. 70% of this budget—$15.4 million—is to be used within the first 6 months of the test market. The advertising message will convey subtle positive messages, including wholesomeness, fun and simplicity. Television commercials emphasizing â€Å"smarter because they’re multigrain† will be shown in order to appeal to the health-oriented consumer segment while depicting the product as unique. In-store displays and free-standing inserts in newspapers will support the advertising campaign, while coupons placed in newspaper free-standing inserts will stimulate trial and repeat sales during the test market Price and Sales: Projected annual sales in the snack chip category amount to half of the market share or about $5 billion. Sales are projected to grow at a 4-5% rate annually due to an increase in per capita consumption. Sun Chips carries a selling price to retailers of $0.385 for the 2.25 ounce package, $1.240 for the 7 ounce package, and $1.732 for the 11 ounce package. The weighted-average price amounts to $0.16 per ounce sold, with 15% of purchases in the Test Market going towards the 2.25-ounce package, 47% to the 7-ounce package, and 38% to the 11-ounce package. With this average price-per-ounce of $0.16, first-year sales on a national level as represented by the Test Market will amount to $82,866,894 for Sun Chips. Decisions/Alternatives: 1. Decide not to launch Sun Chips 2. Continue to test the product and risk having a competitor launch a similar product nationally or regionally 3. Expand and launch a national introduction, requiring adequate manufacturing capacity Strategies: 1. Increase advertising and merchandising spending to either test further or launch nationally 2. Introduce a larger package size 3. Build the household repeat and depth of repeat business by introducing a flavor extension (mild cheddar) 6. Given your assessment of the test market results, what actions should Dwight Riskey recommend to Frito-Lay’s top executives? We believe that Riskey should implement the flavor extension strategy while continuing to test the product for another 6 months. The extension would increase the â€Å"repeats per repeater† to an average of 3.5 times per year instead of 3 times per year due to greater variety for consumers. This will increase expected national sales from $82,866,894 to $90,984,446, or $8,117,552 closer to the company’s $100 million goal. The introduction of another flavor could increase the cannibalization rate from 30% to 35%. This, however, actually amounts to only 23% cannibalization because 1/3 of this cannibalized volume stems from Doritos which have the same suggested retail price as Sun Chips. Adding another flavor will also increase brand awareness (33%) even further past the successful O’Grady’s brand awareness of 28% before the product can be released on a national scale. In taking more time to test the product and by adding another flavor, Frito-Lay can increase first-year sales by building repeat business, as well as increase brand awareness to assure they reach their goal of $100 million in first-year sales.

The Sole Method You Should Be Using for Easy Argument Essay Topics

The Sole Method You Should Be Using for Easy Argument Essay Topics The Key to Successful Easy Argument Essay Topics So, your efforts targeted at broadening students' racial tolerance should be applauded. There is, to be sure, about the presence of racism in the Midwest. You will be assigned a topic, or your professor will allow you to select your own. Recent argumentative essay topics that are related to society is going to do. The list of the greatest argumentative essay topics for college students contains nice and versatile tips that will boost your students and make them think. It is impossible to create a true friend online. The topic has to be interesting, the topic has to be essential and finally the topic has to be informative. Quite frequently, the ideal topic is one which you truly care about, but you also will need to get well prepared to research it. The Ultimate Easy Argument Essay Topics Trick You'll certainly lose the argument if nobody would like to read your essay. The dearth of very good support sources are going to result in a decrease grade. For instance, there is not any way you'll be able to argue on the subject of whether humans walk on two legs because it is a known fact with no attached debate. You came to the correct location! When you get rid of an argument, it is likely that you only used opinion to strengthen your position. Remember you can make funny argumentative essays if you do a few things. The second thing that you should take care of once you choose the title is to maintain in mind five varieties of argument claims. It's not sufficient to select a topic which everybody agrees on. The Bizarre Secret of Easy Argument Essay Topics Don't forget you will want to analyze arguments and evidence for your essay to appear good. You will need to back up your viewpoint with well-researched facts and data too. When you are finished with your essay, you must not merely check it for spelling and grammatical errors, but nevertheless, it also has to be checked for logical fallacies. In this kind of situation, it's more convenient to discover ready-made essays and use them as an example. The intent of assigning an essay to middle school students is to make awareness and permit them to develop writing skills. If you don't get a particular subject from your teacher, it means that you may use your whole imagination in picking out the subject. Students are accustomed to the simple fact which their professors give them with the assignment's topic. You've got an option to select one of the greatest topics for argumentative essay from our list! The above-mentioned topic selection may give you a crystal clear comprehension of what things to write about. When choosing an issue to argue, you have to settle on a topic that has more than 1 side. Picking a simple topic may prove to be an incorrect track since you may have difficulties finding credible sources to support your views. The thesis provides you with a guideline on how best to go about with writing the essay. Instead of just immediately writing about your argumentative essay topic, you first have to think about what it is you are likely to put back on your paper through a procedure of brainstorming and pre-writing. An argumentative paper is part of the persuasion. To discover argumentative essay topics easy on various platforms, you want to comprehend about the argumentative essay. An argumentative essay is a certain sort of academic writing. It does not include unsubstantiated opinions. It requires you to decide on a topic and take a position on it.

Structural Functionalism Approach to Political Science

PS 101: INTRODUCTION TO POLITICAL SCIENCE Fall 2003 Professor Marc Ross Overview. What is politics and how do political scientists study it? If this question were asked about one of the natural sciences, students would be given a short definition, examples of key problems it addresses, and an overview of the methods employed in the field. Political science, however, cannot offer a clear single answer. Rather, political scientists study politics in a wide range of settings and in a variety of ways. Among political scientists there is great disagreement about what the fields core questions are and how best to study them. As a result the majority of political science departments in the United States do not offer an introduction to the field†¦show more content†¦Another focus is on the tensions between diversity and democracy in the contemporary world. The final section of the course examines international relationships focusing primarily, but the entirely, on the question of in ter-state relations for some of the authors we will consider emphasize ways in which the nation-state is but one of many international actors. Of particular importance are the different kinds of conflicts found in the international system and the paucity of institutions and practices to manage them constructively. Assignments. Students are expected to complete the assigned readings before each class and come ready to raise questions and to participate in class discussions. There is a good deal of reading assigned and you should only take this course if you are prepared to complete it on time. Class participation is important and attendance matters and will be part of your grade. In addition to the assigned readings, it is expected that students will read a daily newspaper such as the Philadelphia Inquirer or The New York Times and one of the goals of the course is to connect current political events to the analytic questions covered in the course. Logs. Each student will write seven logs consisting of a paragraph to a page of reactions to material in the readings or in recent classes. The logs provide a way for students to formulate their thoughts about specific theories, to raise questions, to ask for clarification, and to makeShow MoreRelatedTalcott Parsons And Structural Functionalism1428 Words   |  6 Pages Structural functionalism, or simply functionalism, is a framework for building theory that sees society as a complex system whose parts work together to promote solidarity and stability. 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