Determinants of Brand Advertising Inefficiency - Evidence from the German Car Market

This paper is concerned with the degree of efficiency in brand advertising in the German car industry that can be observed and how such inefficiency can be explained. Brand advertising budgets from 35 car manufacturers in the German market from 1998-2001 form the basis for estimating brand advertising inefficiency with regard to brand consideration. For that purpose, various DEA models are used. Explanatory variables that are potentially responsible for inefficiency are identified and tested empirically. The results indicate that advertising inefficiency in the German Car market results from a lack of user experience with brands and inferior brand image. They also suggest that substituting advertising input slacks for customer relationship management instruments may significantly increase marketing.