Bright brands in advertising expenses, when the rival faces before – here is why

Imagine: you are responsible for marketing for a immense car manufacturer, and your biggest competitor has just canceled thousands of vehicles. Now customers are worried about the safety of cars like yours. Do you apply the moment and raise advertising to steal market share? Or maybe you are withdrawing ads, fearing that customers will connect your brand with Bad Press?

What Marketing professors like me Call “substitute brands”, this kind of dilemma appears all the time. Regardless of whether it is a product withdrawal, violation of customer data or a scandal, bad news for one brand can shake customers’ confidence in the entire product category.

Substantial question: should competitors answer, increasing or decreasing advertising? Will these corrections facilitate or hurt sales?

At first glance, the answer may seem obvious. More advertising expenses should mean a larger market share, right? But reality is more convoluted. IN Last examination Looking at how 62 car brands reacted to the withdrawal in 2014, my colleagues and I discovered that on average, when the competing brand publishes, its competitors reduced the expenditure on advertising by half. In other words, most brands treat the rival’s crisis as a threat, not an opportunity.

And when we looked at the content of the ads, we saw something even more engaging. When the competing brand tripped, we found that the substitutes increased their advertising focused on an average price by 25%, probably to attract transaction seekers. At the same time, they cut out an advertising focused on quality by 71%, perhaps to avoid unwanted comparisons.

Here is Kicker: this strategy works.

We discovered the average withdrawal of a rival, which increases the monthly sales of the substitute by 35.3% – and the more the brand withdraws the advertising expenses, the greater the effect. So, when a competitor is due, the best answer is not necessarily to shout louder. Instead, the data suggest a smarter game: spend strategically, focus on price messages and avoid paying attention to quality comparisons.

How we did our work

To understand how the brands react when the competitor is in the face of crisis, we focused on real cases: Reminder of Volkswagen Of the almost half a million cars marked under the Sagitar model in October 2014, this gave an ideal opportunity to examine how competitive brands adapted their advertising strategies.

We identified Sagitar-62 replacement models, other sedans in class A category, sold by over 30 manufacturers-we collected data on sales and advertising expenses on 308 media markets in months before and after withdrawal. Then we conducted a statistical analysis, controlling several other variables that could affect AD.

Why does it matter

Earlier research offers mixed tips About how a replacement brand should adapt advertising expenses after a rival’s marketing crisis. Anecdotal evidence It is also mixed from the automotive industry and consumer goods. For example, after Samsung remembered the galaxy 7 in 2016, due to defective batteries competing with foni They aggressively increased the advertisement trying Increase their market share.

Similarly, in 2010, after the withdrawal of Toyota, he offered General Motors Encouragement for Toyota owners to switch to GM car. GM marketing director set these encouragements As a way of GM, they suggest a meeting with the desire for car buyers for peace and reports GM and others compete for the sale of car manufacturers After reminding Toyota.

But my team’s research suggests that this type of strategy may not be the best. Sometimes saying that he speaks less.

Research is a tiny approach to an engaging academic work.