The authors examine the long-term effects of promotion and advertising
on consumers' brand choice behavior. They use 8 1/4 years of panel da
ta for a frequently purchased packaged good to address two questions:
(1) Do consumers' responses to marketing mix variables, such as price,
change over a long period of time? (2) If yes, are these changes asso
ciated with changes in manufacturers' advertising and retailers' promo
tional policies? Using these results, the authors draw implications fo
r manufacturers' pricing, advertising, and promotion policies. The aut
hors use a two-stage approach, which permits them to assess the medium
-term (quarterly) effects of advertising and promotion as well as thei
r long-term (i.e., over an infinite horizon) effects. Their results ar
e consistent with the hypotheses that consumers become more price and
promotion sensitive over time because of reduced advertising and incre
ased promotions.