Building Brands

Which marketing strategies are most effective for introducing new brands? This paper sheds light on this issue by ascribing growth performance to firms' post-launch marketing choices. Specifically, we shed light on diffusion in repeat purchase contexts by offering an integrated view across the entire marketing mix and afford insights into introduction strategies that enhance the potential for successful roll-outs. By considering launch strategies, we advance the literature on new product diffusion in two ways; by conducting an empirical generalization pertaining to the efficacy of marketing strategies in the context of new product launch, and by developing a methodology to achieve these aims as discussed subsequently. First, we explore the effect of various marketing strategies (advertising spending, feature and display activity, regular price, discount depth, product line length, distribution breadth and distribution depth in unison) on new brand growth across 225 CPG brands. Though some diffusion studies link certain elements of the marketing mix to growth and/or market potential of a new brand, most previous work focuses almost exclusively on the role of price and advertising. Surprisingly much less emphasis has been placed on distribution and product line. By considering launch strategies in their entirety, we control for potential correlations across various marketing instruments and we can gauge their relative effect in order to assess which are most efficacious. Second, we develop a diffusion model for frequently purchased CPG brands that simultaneously (a) considers the effect of repeat purchases, (b) accommodates a variety of potential diffusion trajectories, (c) separates short-term fluctuations in sales from long-term changes in brand performance arising from various marketing strategies, and (d) controls for