Does Advertising Overcome Brand Loyalty?: Evidence From the Breakfast-Cereals Market
- Topics:
- Brand Management,
- Brand Strategy,
- Marketing Strategy
- Source:
- Blackwell Publishing
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Overview: In differentiated product markets where consumer preferences are characterized by brand loyalty, an important role for advertising may be to overcome brand loyalty by encouraging consumers to switch to less familiar brands. Using a scanner panel dataset of breakfast-cereal purchases, evidence is found consistent with the hypothesis that advertising counteracts the tendencies of brand loyalty toward repeat purchasing. Equivalently, advertising reduces switching costs in this market. Furthermore, counterfactual experiments demonstrate that in markets with brand loyalty, advertising is an attractive and effective option - relative to alternative promotional activities, such as price discounts - of stimulating demand for a brand.
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Format: PDF | Size: 173KB | Date: Apr 2004 | Pages: 32
