EMPIRICAL GENERALIZATIONS ABOUT THE IMPACT OF ADVERTISING ON PRICE SENSITIVITY AND PRICE

Consumers' sensitivities to price changes are an important input to st rategic and tactical decisions. It has been argued that price sensitiv ities depend on factors such as advertising Prior studies on the effec t of advertising on consumer price sensitivity have found seemingly co nflicting results. We analyze the characteristics of previous studies in marketing and generate a set of three empirical generalizations. Th ese are (1) an increase in price advertising leads to higher price sen sitivity among consumers, (2) the use of price advertising leads to lo wer prices, and (3) an increase in nonprice advertising leads to lower price sensitivity among consumers. These generalizations have importa nt implications for managers and researchers. Managers need to coordin ate their advertising and pricing decisions to attain maximum profits. For researchers, our summary and discussion of empirical results prov ide directions for future.