The impact of advertising on market share: Controlling for clutter, familiarity, and goodwill decay

The advertising-sales relationship remains paramount. This study, believed to be the largest that focuses on automotive sales and advertising, investigates ceilings and thresholds by optimizing budget allocations among media.

MANAGEMENT SLANT

  • A significant portion of advertising is wasted because of suboptimal media allocation that overlooks the impact of clutter, familiarity, and sales percentage difference on thresholds, ceilings, advertising goodwill, and market share.
  • Empirical data were used on sales and advertising expenditure from the South African automotive market over eight years. Clutter was a significant and large-scale determinant of sales’ rate of decay. At high levels of clutter, almost no level of advertising affected market share.
  • In a highly competitive environment, even when clutter is distributed throughout other media, all media returns are reduced significantly and...

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