Advertising’s Sequence of Effects on Consumer Mindset and Sales*
Shuba SrinivasanAdele and Norman Barron Professor of MarketingBoston University
* With A. Valenti, G.Yildirim, M. Vanhuele, and K. Pauwels
Classical HoEAdvertising
Sales
Cognition
Affect
Experience
Barry and Howard, 1990; Lavidge and Steiner, 1961; Petty and Cacioppo, 1984, 1986; Vakratsas and Ambler, 1999; Vaughn 1980, 1986
HoE, dead or alive?Vakratsas and Ambler
(1999)
CAE are simultaneously triggered to drive sales
Based on a literature review
Bruce, Peters, and Naik(2012)
Adv. simultaneously triggers sales and CAE to
initiate HoE
Based on a single brand
Dead Alive
Research questions
1. Is the HOE in advertising dead or alive?
2. Does the HoE framework generalize across brands and products?
3. Is there a prevalent HoE sequence?
4. Do framework or sequence depend on brand and category characteristics?
Alternative models
Hierarchy type Model Advertising Triggers
Hierarchy sequence
Purchase reinforcement Dynamics
Classical
1 Only E E-C-A2 Only C C-E-A3 Only E E-A-C4 Only C C-A-E5 Only A A-E-C6 Only A A-C-E
Simultaneous 7 C A E Simultaneous Only E
Integrated
8
C A E Sales
E-C-A
C A E Sales C A E Sales
9 C-E-A10 E-A-C11 C-A-E12 A-E-C13 A-C-E
Modeling requirements• Impose causal sequence of HoE according to theory (e.g., Adv -> A
-> C -> E -> Sales)
• Intermediate factors (C, A, E) and sales are endogenous;
• Marketing variables (advertising, price, promo) as exogenous or endogenous
• Intermediate factors (C, A, E) and sales are dynamic
• State space models
o DFMs (Bruce et al. 2012): similar results, but sample size issues
o Restricted VARs
DataMarketing
Sales
Mindset metrics
Brand characteristics
Category characteristics
• 178 brands from 18 categories in France
• Four-weekly data from January 2003 to July 2010
• Panel of 12,000 households
• Source: Brand performance tracker by Kantar Worldpanel
• Panel of 1,100 respondents in France
• Source: primary data
Best model (Brand 1 in beer)HoE Model LL AIC BIC
Classical
1 -765.1 1,592.1 1,671.92 -755.7 1,573.4 1,653.23 -774.5 1,611.0 1,690.84 -765.0 1,592.0 1,671.95 -764.9 1,591.8 1,671.66 -766.6 1,595.1 1,674.9
Vakratsas-Ambler 7 -763.9 1,595.8 1,683.3
Integrated
8 -724.4 1,530.7 1,636.39 -716.4 1,514.8 1,620.410 -724.1 1,530.1 1,635.711 -723.9 1,529.9 1,635.412 -724.4 1,530.8 1,636.313 -713.9 1,509.7 1,615.3
Model with best fit to data: Integrated HOE (ACE sequence) is operating HoE
RQ 1
HoE is alive!• 94% of brands (168 of 178) have Integrated HoE as operating
framework
• 4% of brands (6 of 178) have Classical HoE as operating framework
• Remaining 4 brands, the two hierarchies indistinguishable
RQ 1
ACE is the most common sequence
Model Sequence Frequency %1-6 All Classical 4 4%8 E-C-A 6 7%9 C-E-A 17 19%10 E-A-C 4 4%11 C-A-E 6 7%12 A-E-C 15 17%13 A-C-E 38 42%
Total 90
RQ 2
Moderators of sequence
RQ 3
𝑃𝑟𝑜𝑏 𝑦! = 1| 𝒙! =exp(𝒙!𝜽)
1 + exp(𝒙!𝜽)
𝒙!𝜽 = 𝜃"𝐻𝑒𝑑𝑜𝑛𝑖𝑐! + 𝜃#𝐷𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑡𝑖𝑎𝑡𝑖𝑜𝑛! + 𝜃$𝑀𝑎𝑟𝑘𝑒𝑡𝑆ℎ𝑎𝑟𝑒! + 𝐶𝑜𝑛𝑡𝑟𝑜𝑙𝑠
i: Brand
Moderators of sequence
RQ 3
E→C→A C→E→A E→A→C C→A→E A→E→C A→C→E
Dependent Variablem8 m9 m10 m11 m12 m13
Hedonic nature 4.74 0.28 -2.21 1.79 1.23 -2.48(3.18) (1.21) (2.31) (2.11) (1.33) (1.16)
Differentiation 0.22 0.04 0.21 0.03 0.00 -0.24(0.09) (0.05) (0.09) (0.08) (0.05) (0.07)
Market Share 0.15 0.02 -0.32 -0.07 -0.02 -0.08(0.1) (0.05) (0.34) (0.12) (0.06) (0.05)
Constant -5.91 -1.90 -5.47 -2.47 -1.37 1.83(1.7) (0.7) (1.77) (1.03) (0.71) (0.73)
Obs 90 90 90 90 90 90LL -14.233 -43.199 -12.171 -21.198 -39.963 -48.629Pseudo R2 0.354 0.010 0.256 0.038 0.015 0.207
Robustness and Managerial Implications1. Simultaneity of marketing? Use only lagged effects ✅
2. Inclusion / exclusion of control variables? ✅
3. Small brands (< 1% market share)? ACE dominates ✅
4. Dynamic Factor Models? Yes, Integrated and ACE ✅
5. Responsiveness of C, A, and E to advertising
6. Sales conversion of C, A, and E
7. Moderators of C, A, and E responsiveness to advertising
Cognition is most responsive to advertising
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
COGNITION AFFECT EXPERIENCE
Conclusions: HoE is alive!1. Integrated HoE framework generalizes across brands
2. ACE is the most common sequence
3. ACE even more prevalent for less differentiated brands, and for utilitarian vs. hedonic products
4. Cognition is most responsive to advertising
5. Last factor in sequence drives sales most
Shuba [email protected]