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...

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Main Authors: OSINGA, Ernst C., LEEFLANG, Peter S. H., SRINIVASAN, Shuba, WIERINGA, Jaap E.
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Language:English
Published: Institutional Knowledge at Singapore Management University 2011
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/5436
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spelling sg-smu-ink.lkcsb_research-64352018-01-12T05:30:09Z Why do firms invest in consumer advertising with limited sales response? A shareholder perspective OSINGA, Ernst C. LEEFLANG, Peter S. H. SRINIVASAN, Shuba WIERINGA, Jaap E. 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. 2011-01-01T08:00:00Z text https://ink.library.smu.edu.sg/lkcsb_research/5436 info:doi/10.1509/jmkg.75.1.109 Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University stock price returns stock price volatility pharmaceutical marketing advertising time-varying parameters Kalman filtering Advertising and Promotion Management Marketing
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic stock price returns
stock price volatility
pharmaceutical marketing
advertising
time-varying parameters
Kalman filtering
Advertising and Promotion Management
Marketing
spellingShingle stock price returns
stock price volatility
pharmaceutical marketing
advertising
time-varying parameters
Kalman filtering
Advertising and Promotion Management
Marketing
OSINGA, Ernst C.
LEEFLANG, Peter S. H.
SRINIVASAN, Shuba
WIERINGA, Jaap E.
Why do firms invest in consumer advertising with limited sales response? A shareholder perspective
description 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.
format text
author OSINGA, Ernst C.
LEEFLANG, Peter S. H.
SRINIVASAN, Shuba
WIERINGA, Jaap E.
author_facet OSINGA, Ernst C.
LEEFLANG, Peter S. H.
SRINIVASAN, Shuba
WIERINGA, Jaap E.
author_sort OSINGA, Ernst C.
title Why do firms invest in consumer advertising with limited sales response? A shareholder perspective
title_short Why do firms invest in consumer advertising with limited sales response? A shareholder perspective
title_full Why do firms invest in consumer advertising with limited sales response? A shareholder perspective
title_fullStr Why do firms invest in consumer advertising with limited sales response? A shareholder perspective
title_full_unstemmed Why do firms invest in consumer advertising with limited sales response? A shareholder perspective
title_sort why do firms invest in consumer advertising with limited sales response? a shareholder perspective
publisher Institutional Knowledge at Singapore Management University
publishDate 2011
url https://ink.library.smu.edu.sg/lkcsb_research/5436
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