Estimating Dynamic Effects of Market Communications Expenditures

Estimating Dynamic Effects of Market Communications Expenditures

By David Bruce Montgomery, Alvin J. Silk
1971Working Paper No. 34

This paper is concerned with the problem of measuring market response to a "communications mix" -- the various means which a firm employs to transmit sales messages to potential buyers. Distributed lag models are applied to time series data for an ethical drug to estimate the short-run and long-run effects on market share of expenditures made for journal advertising, direct mail advertising and samples and literature. Important differences were found among the communications variables with respect to the magnitude and over-time pattern of effect each had on market share. The managerial implications of the findings are discussed.