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Advertising Management Article Review

Members : Abhishek Raj Ajit Kumar K Ankit Kumar Manu Singhal Sourabh Kothari Suhail Pawaskar

F-005 F-214 F-069 F-030 F-055 F-056

The paper attacks the problem of wringing more value out of advertising dollars by using a strategic framework ranging from examination of loyaltybased segmentation to media spending inefficiencies Competition facing a given brand influences the effectiveness of that brands advertising. Specifically, the study tests the idea that whether a companys customer satisfaction (CS) ratings exceed or trail the CS ratings of its major competitors affects the return on its advertising dollars in building brand equity

Advertising and brand equity the role of customer satisfaction

The Study assumes two lines of reasoning:
Firstly, the study assumes advertising to be more effective in building brand equity when the advertisers CS ratings are greater than those of the competitors Secondly, A brand with comparatively high CS ratings, a reminder ad has greater ability to increase brand equity, and viewed in a financial framework, has greater ability to increase current and future earnings

Data Sources
Obtained data for the study from widelyrecognized sources

Compustat for advertising expenditures, the American Customer Satisfaction Index (ACSI) website for CS ratings, and Interbrands top 100 list of companies for brand equity

Criteria for inclusion

Brands for which all three sources provided data were included in the study
Availability of annual advertising expenditures Availability of CS ratings for the company and at least one of its top three competitors Availability of annual brand equity data

Data Collected
Data for the selected brands/companies from 2001 to 2009 was taken and analysed
Advertising expenditures

Relative customer satisfaction

Brand equity

Hierarchical linear modelling (HLM) to analyze the data

This method of analysis is required when there is a nested structure in the data, as in this study where annual observations are nested within companies

The method allowed us to test the overall idea that brand equity would be predicted by advertising expenditures, by the comparison dummy variable (1 or 0), and by the interaction between advertising expenditure and the CS dummy variable.

Measuring Brand Equity

Measure brand knowledge- consumer feelings or perceptions related to the brand for brand image and brand awareness Employ multiple measurement techniques-aided and unaided

Include both qualitative and quantitative techniques Qualitative : Brand Perception, Brand Image Quantitative : Brand Awareness, Brand Loyalty,Brand Recall

Final Results
A company can test for itself the relationships we found here. While we limited the dataset to best brands and to brands synonymous with the company name, any advertiser can forgo those constraints. A multi-brand company, for example, can see what data are available concerning the leading competitors of its several brands Customer satisfaction data, ones own and those of major competitors, are likely to be worth collecting/purchasing even if other data are not available

If a higher relative CS rating is linked to the increasing the effectiveness of advertising in building brand value, managers may consider what else it might be relevant to.

Clearly an important implication from this study is the penalty in advertising effectiveness for the company that trails its rivals in customer satisfaction. If the cause or causes can be identied, they are likely to require expenditures to ameliorate them, whether through quality control procedures, sales training, customer service hires the list seems endless

The relationship between advertising expenditures and their brand equity payoff appears greater for companies with not just satised customers but customers who are more satised than are the customers of rival brands

Thank You