ASSESSING LONG-TERM PROMOTIONAL INFLUENCES ON MARKET-STRUCTURE

The allocation of marketing budgets across advertising and sales promo tions has changed over the past decade with a marked decrease in the p ercentage of budgets directed towards advertising. Moreover, there has been much speculation regarding how these changes have affected a bra nd's positioning vis-a-vis its competitors. In spite of this speculati on, previous research has not examined the impact of changes in promot ion and advertising on market structure. The purpose of this paper is therefore to ascertain how changes in promotional and advertising poli cy affect market structure over the long-term. The eight and one quart er years of scanner panel data used for our analysis indicate that bra nds in the analyzed product category tend to fall into premium/non-pre mium and attribute-based (mildness) tiers. Furthermore, the data sugge st that the differentiation between non-premium and premium brands has diminished during the period of our study (1984-1992). The data also suggest that increases in price promotions and reductions in advertisi ng have led to decreased differentiation between brands. These finding s suggest that shifts in marketing dollars from advertising to promoti ons have made national brands more vulnerable to store brands' marketi ng activity. (C) 1998 Elsevier Science B.V.