Lecture 2 Flashcards
advertising elasticity
the percentage increase in sales for a 1% increase in advertising
price elasticity
the percentage change in quantity demanded when there is a 1% increase in price
average price elasticity
- price +1% -> demand (sales) -2.62%
- price -1% -> demand (sales) +2.62%
meta analysis of brand advertising elasticities
- average short-term advertising elasticity is 0.12
- average long-term advertising elasticity is 0.24
- advertising elasticity declined over time
- advertising elasticity is higher for durable goods than nondurable goods
- advertising elasticity is higher in the early stage than the mature stage of product life cycle
advertising elasticity over time
declined over time
- previous estimates: 0.22 short-term, 0.41 long-term
- new estimates: 0.12 short-term, 0.24 long-term
causes for decline in advertising elasticity
- market characteristics
- research methods
- consumer responses (advertising clutter)
do sex and violence sell?
sex and violence draw attention and distract from other information
- violent media content leads to lower brand memory, less favorable brand attitude, lower purchase intentions
- sexual ad content leads to less favorable brand attitude
- when media and ad content are congruent, brand memory improved and buying intentions increased
sex and violence draw attention
proposal
- sex and violence grab attention
- side effect: reduced attention for other information
- consequence: sex and violence lowers brand memory, attitude, and buying intentions
but
- attention ≠ purchase intention
optimal advertising
if advertising optimally in the past, the decline in advertising elasticity suggests a reduction in conventional advertising
advertising elasticity during recession
on average does not decrease
EU vs NA advertising elasticity
advertising elasticity higher on average in EU than NA
- underadvertising in EU? overadvertising elasticity in US?
TV vs print advertising
TV advertising elasticity higher than print advertising elasticity in short run
- reverse in long run
congruity priming hypothesis
placing violent advertisements in a violent program or sexual advertisements in a sexual program facilitates memory and improves attitudes and buying intentions
cognitive interference hypothesis
suggests that placing violent advertisements in a violent program or sexual advertisements in a sexual program impairs memory and reduces attitudes and buying intentions
content intensity: distraction and indecency hypothesis
suggests that the intensity of violent and sexual content contained in media and advertisements might moderate the effects of advertisements
