THE IMPACT OF MANUFACTURER ADVERTISEMENT ON RETAIL SALES:

THE IMPACT OF MANUFACTURER ADVERTISEMENT ON RETAIL SALES:

THE IMPACT OF MANUFACTURER ADVERTISEMENT ON RETAIL SALES:

ABSTRACT:

The major aim of this thesis was to demonstrate the impact of manufacturer
advertising on the retail sales.

Good advertising requires competent personnel including a number of specialists

to enable it thrive in the ever dynamic and competitive business environment.

In recognizing the role advertising can play a growing number of companies and
establishments have to embark on a nationwide advertising campaign.
Advertising campaigns obviously informed by depressed consumer demand,
thrive by persuading the consumer on the need for consumptions. At the
completion of this thesis, the impact of advertising on retail sales was clearly
defined.

This research examines how retailer and consumer responses influence a

manufacturer’s advertising on retail sales. The manufacturer attempts to
maximize its profits by advertising directly to consumers and offering periodic
trade deal discounts to the retailer in the hope that the retailer will in turn “pass
through” a retailer promotion to the consumer. We show how the manufacturer's
optimal allocation depends on consumer response to advertising, consumer
response to retailer promotions, retailer inventory carrying cost, and retailer pass
through behavior. The finding supports the informative role of advertising in the
context of retail price promotion.
THE IMPACT OF MANUFACTURER ADVERTISEMENT ON RETAIL SALES:

CONTENTS:

1 INTRODUCTION:
1 INTRODUCTION..........................................................................................................1
1.1 Background Information .............................................................................................1
1.2 Objectives of study.......................................................................................................1
1.3 Research hypotheses and limitations of the study......................................................3
1.4 Definition of key terms.................................................................................................3

2 ADVERTISING IN PAKISTAN.........................................................................................7

2.1 Historical background of the study ..............................................................................7

2.2 Theoretical framework .................................................................................................7
2.3 Importance of advertising............................................................................................10
2.4 Purpose of advertising.................................................................................................12
2.5 General impact of advertising on products and services of Manufacturers................13
2.6 Advertising media used by Manufacturers .................................................................15

3 RESEARCH METHOD.......................................................................................................18

3.1 Restatement of hypothesis............................................................................................18

3.2 Determination of respondents and sample size.............................................................18
3.3 Methods of data collection ...........................................................................................18
3.4 Limitations of the research method...............................................................................18

4 DATA PRESENTATION AND ANALYSIS.......................................................................19

4.1 Table Analysis................................................................................................................19

4.1.1 Section 1 ................................................................................................ 19
4.1.2 Degree of response tables...................................................................... 20
4.2 Testing for hypothesis

5 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION........ 28

5.1 Summary of findings......................................................................................... 28

5.2 Conclusion......................................................................................................... 28
5.3 Recommendation............................................................................................... 29

6 REFERENCES............................................................................................................ 31
THE IMPACT OF MANUFACTURER ADVERTISEMENT ON RETAIL SALES:

INTRODUCTION:
Advertising is a marketing communication that employs an openly sponsored, non-personal
message to promote or sell a product, service or idea. Sponsors of advertising are typically
businesses wishing to promote their products or services. Advertising is differentiated from public
relations in that an advertiser pays for and has control over the message. It differs from personal
selling in that the message is non-personal, i.e., not directed to a particular individual. Advertising is
communicated through various mass media, including traditional media such as newspapers,
magazines, television, radio, outdoor advertising or direct mail; and new media such as search
results, blogs, social media, websites or text messages. The actual presentation of the message in a
medium is referred to as an advertisement, or "ad" or advert for short. [1]

Advertising is a great way to send a specialized message to a large group of consumers. But how do
you know how effective those messages are? Companies that specialize in advertising research have
the tools and methods to give insight into the effectiveness of your advertising. They can also help
you decide the right advertising methods and mediums to use – including print, digital, television
and radio – so you reach your customers on their preferred platforms. These companies can help you
target the right consumers and uncover their needs, desires and motivations so you can tailor your
advertising for optimal success. They can also help give insight on competitors’ advertising so you
can stay up-to-speed with your competition. For insight into your advertising, consider these
specialized research companies.

III. Review of Literature:

III. Review of Literature In the past, researchers have attempted to explain some of the confusion
regarding the impact and effectiveness of marketing communications, most often focusing on
advertising and promotional expenditures. Farris and Buzzell (1979) explained in their study how and
why differences in marketing communication intensity (as measured by advertising and promotion
expenditures to sales) were related to some basic variables. Therefore, an attempt was made to identify
the factors that empirically explain the variations in advertising and their impact on retail sales. Their
study indicated that advertising expenditures expressed as a proportion of sales vary across industries,
across firms within an industry and across time for a given firm or very useful to retailers.
Balasubramanian and Kumar (1990)also confirmed the same finding. Zinkhan and Cheng (1992) again
used the ratio of advertising expenditures to sales as a proxy for marketing communication intensity to
increase the sales of retailer. They investigated the variation of communication intensity due to the type
of offering (productor service) and the type of market (consumer or manufacturing). They found that,
both, the type of offering and the type of market affect the variation of communication intensity. Their
results indicated that consumer product firms spend more on advertising than manufacturing product
firms. Simultaneously though, under pressure to produce immediate profits, managers still tend to view
advertising as an expense and reduce advertising budgets in times of downturn, even though they
recognize that advertising can be treated as an investment (Dean 1966; Hirschey and Weygandt 1985).
Even though this research stream has shed some light on how advertising works or should work, its
contributions to our understanding of the role of advertising in a competitive environment for retailers,
THE IMPACT OF MANUFACTURER ADVERTISEMENT ON RETAIL SALES:

and ever changing market environment have been limited. For example, a group of marketing
researchers in this area (Bass and Leone 1983; Clarke 1976; Srinivasan and Weir 1988) who employed
market-level data to explore the long-termor carryover effects of advertising found that the duration of
advertising effects depended on the data interval under study to retailers. Clarke (1976) and Assmus,
Farley, and Lehmann (1984) suggested that 90 percent of advertising effects dissipate after three to
fifteen months for retailers. Leone (1995) argued that the range of advertising effects should be
narrowed to six to nine months based on his study. However, Dekimpe and Hanssens (1995) concluded
that the effects of advertising did not disperse within a year.

1.2. Objectives of the Study:

The study aims to achieve the following objectives:

a. To understand the change patterns in the advertisement, sales and profit in Pakistan manufacturing
companies and impact of advertisement on retail sales.

b. To study the inter-relationship between advertisement, retail sales and profit;

c. To draw policy implications for marketers as to whether increase in advertisements leads to increase
in retail sales.
THE IMPACT OF MANUFACTURER ADVERTISEMENT ON RETAIL SALES:

REFERNCES:

(1)
https://www.quirks.com/articles/22-top-advertising-research-companies-2019

Abstract:

(2)https://doi.org/10.1016/S0022-4359(02)00066-0

Raj Sethuraman is Assistant Professor of Marketing and Leo F. Corrigan Jr. faculty research fellow,
Southern Methodist University, Cox School of Business.