Determinants of temporal variations in generic advertising effectiveness

This study develops a varying-parameter advertising model specifying advertising parameters as a function of advertising strategies and market environments to explain the varying nature of the advertising responses. This model allows researchers to examine the sources of change in advertising effectiveness over time. The model is applied to the New York City fluid milk market for the period from January, 1986 through June, 1995. Results indicate that advertising strategies and market environments play important roles in determining advertising effectiveness. Particularly, demographic factors were more important than economic factors. The results also suggest that when the market conditions are unfavorable due to increase in price, percentage of African Americans, and percentage of food expenditures for eating away from home, advertising becomes more important and effective. [JEL Classification Codes: Q130, M300, and M370] © 2000 John Wiley & Sons, Inc.