Thomas J. Steenburgh
Executive Summary
Marketing investments are designed to change consumer behavior in ways that help goods compete in the marketplace. Previous work has focused on quantifying how these investments affect either consumer decision making or how they affect competing goods. On the one hand, decision-based decompositions measure an investment's impact on consumer behavior; they attribute the growth in own-good demand to changes in the consumers' decision-making process. On the other hand, unit-based decompositions and share-based decompositions measure an investment's impact on competing goods; they attribute the same growth in own-good demand to either rivalrous or nonrivalrous sources.
This article shows how to combine the consumer and the competitive points of view into a single decomposition. Not only does this provide a more complete understanding of how marketing investments work, but it also can be used to simplify and clarify the data needed for decision making. In a single table, managers learn how changes to a marketing action will affect both consumer behavior and competing goods in the market. If a manager wants to alter the firm's portfolio of investments, "what-if" scenarios can be constructed for each of the potential actions at multiple levels of investment. The scenarios can then be combined to find a portfolio that meets the consumers' needs and the firm's strategic objectives. Similarly, if a manager is looking for new ways to communicate with consumers, he or she can review the firm's history of investments to determine what has enticed them in the past, a first step toward finding creative ways of reaching them in the future.
In summary, this article provides a clear and accurate method to attribute the growth in own-good demand to changes in (1) consumers' decisions, (2) competitive demand, and (3) competitive market share. This is accomplished by settling some confusion about what the decision- and share-based decompositions mean, by discussing how each of the decompositions is related to the others, and by discussing the research questions that each of the decompositions can answer. From the unit-based decomposition, brand managers can learn whether the growth in own-good demand is due to stolen units. From the share-based decomposition, managers can learn whether it is due to stolen market share. From the decision-based decomposition, managers can learn which changes in consumer behavior lead to the growth in demand. Used together, these methods provide a comprehensive understand of a marketing investment's impact.
Biography
Thomas J. Steenburgh is Assistant Professor of Marketing in the Harvard Business School. He teaches the required first-year course in marketing. Tom's research addresses questions that help managers measure the effectiveness of their marketing strategies and improve the efficiency of their decision making. He's worked on questions such as, "Do lump-sum bonuses motivate salespeople to work harder or to play timing games with their orders?" and "Do zip codes reveal valuable, untapped information about consumers?" Before returning to academics, he held several positions in marketing and operations at the Xerox Corporation.
Journal of Marketing Research, Vol. XLIV, No. 4, November 2007
View Table of Contents.