SHARE AND GROWTH ARE NOT GOOD PREDICTORS OF THE ADVERTISING AND PROMOTION SALES RATIO

Researchers have tried for several years to explain variations in adve rtising and promotion/sales (A&P/S) ratios across brands, product-mark et categories firms, and industries. Market share (MS) and market grow th (MG) have been included as explanatory variables in almost all of t hese studies A recent article by Balasubramanian and Kumar (1 990) pre sents a parsimonious yet powerful model explaining A&P/S ratios using these two variables and their interaction. Though the MG-MS matrix pro vides a possible rationale for the use of these variables in an intera ction model, the authors argue that it is more consistent with strateg ic business unit (SBU)-level data than firm data. They attempt to repl icate the model with two other data sets (SBU and brand data) as well as a version of the firm data used in the original study. Being unable to find empirical support for the model with any of the three data se ts, they argue that further research should rely on other variables.