Measuring Dynamic Marketing Mix Interactions Using Translog Functions

This paper proposes translog sales functions as a more general method for econometric estimation of marketing mix interactions than conventional specifications. A reexamination of the monthly Lydia Pinkham advertising-sales data shows that: (1) the marginal elasticities and productivities of current...

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Bibliographic Details
Published in:The Journal of business (Chicago, Ill.) Ill.), 1982-07, Vol.55 (3), p.401-415
Main Authors: Jagpal, Harsharanjeet S., Sudit, Ephraim F., Vinod, Hrishikesh D.
Format: Article
Language:English
Subjects:
Advertising
Advertising Research
Advertising to sales ratios
Business structures
Econometrics
Economic models
Elasticity of demand
Marginal productivity
Marketing
Marketing mix
Marketing mixes
Measurement
Productivity
Regression analysis
Sales
Two period model
Variables
Word of mouth advertising
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Summary:This paper proposes translog sales functions as a more general method for econometric estimation of marketing mix interactions than conventional specifications. A reexamination of the monthly Lydia Pinkham advertising-sales data shows that: (1) the marginal elasticities and productivities of current and lagged advertising depend on the time path of spending; (2) the hypothesis of diminishing returns to advertising is supported after allowing for a general pattern of carryover effects; (3) translog models can be fitted to historical data to measure the effectiveness of advertising policy for control purposes when test market experiments are too expensive, risky, or time-consuming.
ISSN:0021-9398
1537-5374
DOI:10.1086/296173