P.S.H. Leeflang

Understanding the marketing department's influence within the firm

Increasing debate centers on the decreasing influence of the marketing department within firms. This study investigates such influence and assesses its determinants and consequences. The results show that the accountability and innovativeness of the marketing department represent the two major drivers of its influence. However, the results do not indicate that the customer-connecting role of the marketing department increases its influence, though this role is important for shaping the firms market orientation. A marketing departments influence is related positively to market orientation, which in turn is related positively to firm performance. This study also suggests a dual relationship between the marketing departments influence and market orientation. A key implication of this study is that marketers should become more accountable and innovative to gain more influence.

Analytics for Customer Engagement

In this article, we discuss the state of the art of models for customer engagement and the problems that are inherent to calibrating and implementing these models. The authors first provide an overview of the data available for customer analytics and discuss recent developments. Next, the authors discuss the models used for studying customer engagement, where they distinguish the following stages: customer acquisition, customer development, and customer retention. Finally, they discuss several organizational issues of analytics for customer engagement, which constitute barriers for introducing analytics for customer engagement.

The estimation of pre- and postpromotion dips with store-level scanner data

One of the mysteries of store-level scanner data modeling is the lack of a dip in sales in the weeks following a promotion. Researchers expect to find a postpromotion dip because analyses of household scanner panel data indicate that consumers tend to accelerate their purchases in response to a promotion—that is, they buy earlier and/or purchase larger quantities than they would in the absence of a promotion. Thus, there should also be a pronounced dip in store-level sales in the weeks following a promotion. However, researchers rarely find such dips at either the category or the brand level. Several arguments have been proposed to account for the lack of a postpromotion dip in store-level sales data and to explain why dips may be hidden. Because dips are difficult to detect by traditional models (and by a visual inspection of the data), the authors propose models that can account for a multitude of factors that together cause complex pre- and postpromotion dips. The authors use three alternative distributed lead and lag structures: an Almon model, an unrestricted dynamic effects model, and an exponential decay model. In each model, the authors include four types of price discounts: without any support, with display-only support, with feature-only support, and with feature and display support. The models are calibrated on store-level scanner data for two product categories: tuna and toilet tissue. The authors estimate the dip to be between 4 and 25% of the current sales effect, which is consistent with household-level studies.

Diagnosing competitive reactions using (aggregated) scanner data

Abstract We study competitive response functions with scanner data on price and promotional activities. Causality tests are used prior to parameter estimation. The results indicate that price and feature have statistically significant causal effects more frequently than other promotional variables and they have disproportionately greater frequencies for quick reactions relative to other instruments. Multiple competitive reactions are common, although the same marketing instrument is more likely to be used to react than a different one. Reactions occur with decreasing probability over time suggesting distinctions between retailer- and manufacturer-dominated reactions. The results can also be used to identify other strategic differences, such as the classification of competitors as leaders and followers.

Building implementable marketing models

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The role of national culture in advertising's sensitivity to business cycles: an investigation across continents

The authors conduct a systematic investigation into the cyclical sensitivity of advertising expenditures in 37 countries, covering four key media: magazines, newspapers, radio, and television. They show that advertising is considerably more sensitive to business-cycle fluctuations than the economy as a whole. Advertising behaves less cyclically in countries high in long-term orientation and power distance, but it is more cyclical in countries high in uncertainty avoidance. Furthermore, advertising is more sensitive to the business cycle in countries characterized by significant stock market pressure and few foreign-owned multinational corporations. The authors provide initial evidence on the long-term social and managerial losses incurred when companies tie ad spending too tightly to business cycles. Countries in which advertising behaves more cyclically exhibit slower growth of the advertising industry. Moreover, private-label growth is higher in countries characterized by more cyclical advertising spending, implying significant losses for brand manufacturers. Finally, an examination of 26 global companies shows that stock price performance is lower for companies that exhibit stronger procyclical advertising spending patterns.

Varying parameter models to accommodate dynamic promotion effects

Abstract The purpose of this paper is to examine the dynamic effects of sales promotions. We create dynamic brand sales models (for weekly store-level scanner data) by relating store intercepts and a brands own price elasticity to a measure of the cumulated previous price discounts – amount and time – for that brand as well as for other brands. The brands own non-price promotional response parameters are related to the time since the most recent promotion for that brand as well as for other brands. We demonstrate that these dynamic econometric models provide greater managerial relevance than static models can.

The commercial use of segmentation and predictive modeling techniques for database marketing in the Netherlands

Although the application of segmentation and predictive modeling is an important topic in the database marketing (DBM) literature, no study has yet investigated the extent of adoption of these techniques. We present the results of a Dutch survey involving 228 database marketing companies. We find that managers tend to rely on intuition and on the long-standing methods RFM and cross-tabulation. Our results indicate that the application of segmentation and response modeling is positively related to company and database size, frequency of customer contact, and the use of a direct channel of distribution. The respondents indicate that future research should focus on models applicable for Internet marketing, long-term effects of direct marketing, irritation from direct marketing offers, and segmentation and predictive modeling techniques.

Marketing theory and practice

Acknowledgements - Preface - List of Tables - List of Figures - Evolution of the Marketing Concept M.J.Baker - The Need for Theory in Marketing M.J.Baker - Sources and Status of Marketing Theory S.Brown - Consumer Behaviour L.McGregor - Organisational Buying Behaviour S.Rajagopa l - Market Segmentation D.Littler - Marketing Research J.Webb - Modelling Markets P.Leeflang - Diffusion Theory & Marketing M.J.Baker - New Product Development S.Hart - Pricing A.Diamantopoulos - Channel Management S.Ennis - Marketing Communications K.Crosier - Analytical Frameworks for Strategic Marketing Planning D.Brownlie - Business to Business Marketing K.Bernard - Retailing S.Carter - Customer Care B.Donaldson - Consumerism D.Tixier - International Marketing M.McDermott & Chan - Marketing and Eastern Europe P.Ghauri - Relationship Marketing Chan & M.McDermott - Marketing, Theory and Practice in a Post-modern Era Cova & Badot - Notes and References - Index

Why do firms invest in consumer advertising with limited sales response? A shareholder perspective

Marketing managers increasingly recognize the need to measure and communicate the impact of their actions on shareholder returns. This study focuses on the shareholder value effects of pharmaceutical direct-to-consumer advertising (DTCA) and direct-to-physician (DTP) marketing efforts. Although DTCA has moderate effects on brand sales and market share, companies invest vast amounts of money in it. Relying on Kalman filtering, the authors develop a methodology to assess the effects from DTCA and DTP on three components of shareholder value: stock return, systematic risk, and idiosyncratic risk. Investors value DTCA positively because it leads to higher stock returns and lower systematic risk. Furthermore, DTCA increases idiosyncratic risk, which does not affect investors who maintain well-diversified portfolios. In contrast, DTP marketing has modest positive effects on stock returns and idiosyncratic risk. The outcomes indicate that evaluations of marketing expenditures should include a consideration of the effects of marketing on multiple stakeholders, not just the sales effects on consumers.