Early Marketing Matters: A Time-Varying Parameter Approach to Persistence Modeling

Publication Type

Journal Article

Publication Date

2-2010

Abstract

Are persistent marketing effects most likely to appear right after the introduction of a product? The authors give an affirmative answer to this question by developing a model that explicitly reports how persistent and transient marketing effects evolve over time. The proposed model provides managers with a valuable tool to evaluate their allocation of marketing expenditures over time. An application of the model to many pharmaceutical products, estimated through (exact initial) Kalman filtering, indicates that both persistent and transient effects occur predominantly immediately after a brand's introduction. Subsequently, the size of the effects declines. The authors theoretically and empirically compare their methodology with methodology based on unit root testing and demonstrate that the need for unit root tests creates difficulties in applying conventional persistence modeling. The authors recommend that marketing models should either accommodate persistent effects that change over time or be applied to mature brands or limited time windows only.

Keywords

persistence modeling, long-term marketing effectiveness, time-varying parameters, Kalman filtering, pharmaceutical marketing

Discipline

Marketing

Research Areas

Marketing

Publication

Journal of Marketing Research

Volume

47

Issue

1

First Page

173

Last Page

185

ISSN

0022-2437

Identifier

10.1509/jmkr.47.1.173

Publisher

American Marketing Association

Additional URL

https://doi.org/10.1509/jmkr.47.1.173

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