The Effects Of Market Concentration On Enterprise Advertising Investment Decisions

With the development of the Chinese economy,enterprises gradually have broken the concept of 'wine is not afraid of alley deep'.In order to establish brands,enterprises began to pay more attention to advertisement investing,so that enterprises can move to the high value-added links of'smile curve'.In recent years,an increasing number of enterprises invest in advertisement to build their brands.The scale of advertising industry has been increasing recently.Why enterprises invest so much in advertisiment?And how enterprises make advertising investment decisions in a specific market structure,which are worth to explore deeply.This dissertation uses the theoretical and empirical analysis to explore the effects of the market structure on the enterprise advertising investment decisions.First,due to the unbalanced of economic development in different regions,the enterprises in different regions are in different competitive environment,so advertising decision-making will be varies in a specific market structure.Second,because of the specific management rule of the state-own enterprise,advertising investment decisions.would be different between non-state-owned enterprises and state-owned enterprises.Third,consumer's choices of durable goods and non durable goods are different,so the advertising investment decisions will be diverse in a specific market structure.This dissertation will further explore these three aspects.Based on the Heckman two-step method,this dissertation analyzes the effects of the market concentration on the enterprises' advertising investment decisions.According to theoretical and empirical analysis of the results,this dissertation draws conclusions as fllowings:First,advertising investment is the key strategic decisions for the consumer goods companies.There are two steps when making advertising investment decisions.One is deciding whether to make advertising investment,the other is advertising investment scale.Second,concentration is a vital consideration of enterprises' advertising investment decisions.Empirical results shows that the relationship between concentration and advertising investment decisions is inverted U-shaped.Third,it is robust that there is a non-monotonic associatiao between the entry barriers and the decision of investing ads.Fourth,enterprises in eastern are inclined to make market-oriented advertising investment decisions compared to the enterprises in the middle areas.Fifth,the export-oriented enterprises do not attach importance to investing ads.This dissertation found a negative correlation between exports and advetisement expenditure.Moreover,compared with non-state-owned enterprises,state-owned enterprises are conservative when making advertising investment decisions.The managers will give up advertising strategy in the market structure of low market concentration.Sixth,the non-durable industry enterprises put emphasis on investing advertisement and take advertisement as an important strategic.But durable goods industry companies regard advertisement as a way of promotion,not a key company strategy.Finally,according to the results,this dissertation give some suggestions for the consumer goods enterprises.