The Informative versus Persuasive Role of Marketing Communication in New Product Categories: An Application to the Prescription Antihistamines Market
Social Science Research Network
Marketing communication plays a major role in influencing consumer purchases in new product categories. An important question about this communication is whether it plays an informative or a persuasive role over the life cycle of the new product category. We expect that consumer uncertainty about the attributes of brands in the new category is high in the early stages of the product life cycle and diminishes over time. The informative role of marketing communication is likely to reduce product
... ncertainty. Therefore, we conjecture that marketing communication plays a predominantly informative role initially and a predominantly persuasive role later. We develop a structural model of demand that allows for the differential impact of informative and persuasive roles of marketing communication over time. In addition, we control for the possibility that product experience also diminishes uncertainty in such categories. We estimate our model on market-level data for the prescription antihistamines category. In our model, physician learning about new antihistamines occurs through detailing (marketing communication directed at physicians) and experience (past prescriptions). Specifically, our model is a random coefficients discrete choice model that allows for category expansion. The model also incorporates a Bayesian learning process through which physicians learn about the efficacy of this new class of drugs. We estimate our model using a GMM-based methodology.