Measuring the brand and category effects of marketing activities on customers

Abstract

Brands play an important role in shaping the impact of a company’s marketing activities on its customers. The key concept of customer-based brand equity in brand research suggests that the effects of different brands differ, even for identical marketing activities. However, empirical analyses that have confirmed the differences in marketing effectiveness across brands are scarce and even fewer studies have compared the effectiveness of multiple marketing activities simultaneously. As a comparison of marketing effectiveness relative to competing brands is important for brand management, this paper presents a method for measuring the differences in marketing effectiveness across brands. The paper employs a hierarchical Bayesian model to compare the effects of pricing and promotional strategies across six makeup cosmetics brands on customers’ responses in Japan. The results reveal that: (a) there are differences in marketing effectiveness between brands for both pricing and promotional strategies, (b) the extent of marketing effectiveness differs between brands for each marketing activity and (c) the effects of pricing and promotional strategies on customers’ responses differ between brands. These results indicate that the hierarchical Bayesian model-based measure for assessing marketing effectiveness proposed in this paper is effective for comparing brands, which highlights the need for different brands to adopt distinct marketing strategies. As the dominant strategy varies by brand, marketers should consider this aspect carefully. Future studies should examine whether purchase intention is directly linked to actual purchases as well as consider alternative independent variables (eg comparisons between promotional strategies) and dependent variables (eg willingness to pay and brand choice).