Building Brands

M. Berk Ataman, Carl F. Mela, Harald J. van Heerde
2008 Marketing science (Providence, R.I.)  
Mela), or heerde@waikato.ac.nz (Van Heerde). Building Brands Which marketing strategies are most effective for introducing new brands? This paper sheds light on this issue by ascribing growth performance to firms' post-launch marketing choices. We decompose the success of a new brand into its ultimate market potential and the rate with which it achieves this potential. To achieve this aim we formulate a Bayesian Dynamic Linear Model (DLM) of repeat purchase diffusion wherein growth and market
more » ... tential are directly linked to the new brands' long-term advertising, promotion, distribution, and product strategy. We perform the analysis on 225 new brand introductions across 22 product categories over five years to develop generalized findings regarding the correlates of new brand success. We find that access to distribution breadth plays the greatest role in the success of a new brand and that investments in distribution and product innovation lead to greater marginal increases in revenue for new brands than either discounting, or feature/display, or advertising. Moreover, distribution interacts with other strategies to enhance their effectiveness. These findings underscore the utility of extending marketing mix models of new brand performance to include product and distribution decisions. Note: The studies listed in the table consider diffusion of durable goods unless marked by an 'a' for frequently purchased consumer product categories. Promotion includes advertising expenditure unless otherwise mentioned. We find that distribution and product play a greater role than discounting, feature/display and advertising in the sales performance of new brands in spite of a focus in the preceding literature on these factors. Overall, we find that access to distribution plays the greatest role in the success of a new brand. Our results also show that advertising plays a greater role in accelerating brand growth than increasing market potential and that discounting has a positive effect on time to maturity but a negative effect on long-term market potential. We consider the
doi:10.1287/mksc.1080.0358 fatcat:4b3gqszsbjexdb2cyk7t5r7pmm