RELATIONSHIPS BETWEEN ALTERNATIVE ASPECTS OF ADVERTISING INTENSITY AND MARKET STRUCTURE IN SELECTED PRODUCT CATEGORIES

The debate regarding the relationships between advertising and various indicants of market structure, and industry concentration in particular, has yet to be resolved despite a broad variety of studies.;Fifty-five simple and multiple regressions are used to estimate various measures of advertising intensity using industry concentration and industry growth as independent variables. Five alternative measures of advertising intensity including both advertising ratios to sales and expenditures are used in two sets of models. Thirty regression equations utilize the dependent measures in a "static" manner: i.e., as in previous studies, the dependent variables are absolute levels of advertising expenditure or ratios-to-sales. The remaining 25 equations ("dynamic models") utilize as dependent variable first-order differences in advertising expenditures or advertising-sales ratios.;Data are used for 12 consumer non-durable goods categories including 154 firms over a maximum period of eight years.;Results provide tentative support for a nonlinear relationship between advertising intensity and industry concentration. Specifically, both total industry and top four firm advertising expenditures level off with higher levels of industry concentration (expressed as an absolute). However, positive changes in total industry advertising expenditures continue to increase at higher levels of the absolute value of industry concentration. At the same time, the share of industry advertising accounted for by top four firms increases steadily as the industry concentration ratio increases.;Two complementary bodies of literature are reviewed and major contributions of each are incorporated into the present study. Three alternative hypothetical models are gleaned from the economic literature while alternative specifications of advertising are developed from the marketing literature.