asahi-india-glass-project-by-dev-masand

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Evaluation of impact of Advertisement in awareness and demand of the
commodity product: Glass

By

Dev Masand
PGDM (HR)

Sinhgad Institute of Management
Vadgaon, Pune

1 | Summer Project Report

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June, 2009


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Evaluation of impact of Advertisement in awareness and demand of the
commodity product: Glass

By

Dev Masand
Under the guidance of

Mr. Alok Agarwal
Zonal Head- West Zone Prof.
M.M. Marathe
(Sales & Marketing) College Project
Guide
Asahi India Glass Ltd.

Mr. Shailesh Ranjan
Area Manager (Head Office)
(Sales & Marketing)
Asahi India Glass Ltd.


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Sinhgad Institute of Management
Vadgaon, Pune
June, 2009


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Certificate of Approval
We approve this Summer Project Report titled " Evaluation of impact of Advertisement
in awareness and demand of the commodity product: Glass " as a certified study in management
carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for
the award of Post Graduate Diploma in Management ( HR) for which it has been submitted.
It is understood that by this approval we do not necessarily endorse or approve any statement
made, opinion expressed or conclusion drawn therein but approve the Summer Project Report
only for the purpose it is submitted.

Summer Project Report Examination Committee for evaluation of Summer Project Report

Name Signature

1. Faculty Examiner

2. PGDM Summer Project Co-coordinator


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Certificate from Summer Project Guides

This is to certify that Mr. Dev Masand a student of the Post Graduate Diploma in
Management (HR), has worked under our guidance and supervision. This Summer Project
Report has the requisite standard and to the best of our knowledge no part of it has been
reproduced from any other summer project, monograph, report or book.

Faculty Guide Organizational Guide
Designation Designation
SIOM Organization

AddressDate

Date


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ACKNOWLEDGEMENT

I am elated to extend my gratitude to the management of Asahi India Glass Ltd. for
providing me an opportunity to undertake the summer internship program in their organization.
The knowledge gained from the organization during the project is of immense help that enables
me to understand the practical applications of the Business concepts in consonance with
academic learning.
I owe sincere thanks to my Project Guide Mr. Alok Agarwal-Zonal Head ( Sales &
Marketing- Mumbai) for guiding me towards every step in completion of this project.

And a special thanks to Mr. Shailesh Ranjan, Mr. Anish, Mr. Sumeet for sharing their
knowledge.
I would like to thank Mr. Milind Marathe for guiding me at every step during Summer
Internship.

And in the end I would like to thank all the House owners, Dealers Sales Executive team
and drivers without whom this project would definitely have been incomplete.

Dev Masand

PGDM(HR)

SIOM


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Table of Contents
Table of Figures.........................................................................................................5
List of Tables..............................................................................................................5
Abbreviation...............................................................................................................5
Abstract......................................................................................................................5
Industry Overview......................................................................................................5
Float Glass Industry in India....................................................................................5
User Segments.......................................................................................................5
Major Producers......................................................................................................5
New Entrants..........................................................................................................5
Current capacity versus demand in India................................................................5
Future Prospectus...................................................................................................5
Current Scenario.....................................................................................................5
Market Share...........................................................................................................5
Company Profile.........................................................................................................5
Vision and Mission...................................................................................................5
Vision...................................................................................................................5
Mission.................................................................................................................5
Guiding principles...................................................................................................5
Collaborators...........................................................................................................5
SBU’S......................................................................................................................5
AIS Auto Glass......................................................................................................5
AIS Glass Solution................................................................................................5
AIS Float Glass.....................................................................................................5
Market Research........................................................................................................5


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Background.............................................................................................................5
Introduction............................................................................................................5
Problem Formulation...............................................................................................5
Literature Review....................................................................................................5
Gaps in The Literature.........................................................................................5
Time Frame................................................................................................................5
The Research Problem............................................................................................5
Research Objective..............................................................................................5
Null hypothesis....................................................................................................5
Alternative hypothesis.........................................................................................5
Scope of The Study..............................................................................................5
Research Design.....................................................................................................5
Research Methodology........................................................................................5
Sample size..........................................................................................................5
Research Instrument...........................................................................................5
Tool of Data Analysis (SPSS)................................................................................5
Results and Conclusion..............................................................................................5
Recommendations.....................................................................................................5
REFERENCES...........................................................................................................5
Appendix -1.............................................................................................................5
Appendix -1


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Table of Figures
Figure 1: Domestic Float Glass Sales.........................................................................5
Figure 2 : Sales Growth of Float Glass........................................................................5
Figure 3 : Company wise capacity of production........................................................5
Figure 4 : Break-up of Capacity..................................................................................5
Figure 5 : Domestic Market Share..............................................................................5
Figure 6: Awareness of Glass brands.........................................................................5
Figure 7: Glass advertisement saw by people............................................................5
Figure 8: Awareness Vs Particular brand....................................................................5
Figure 9: Whether go for buying................................................................................5
Figure 10: Purchase of glass......................................................................................5
Figure 11: Importance of brand..................................................................................5
Figure 12: Awareness Vs whether go for buying........................................................5
Figure 13: Time Taken at Retail Counter....................................................................5
Figure 14: Preference for particular brand.................................................................5
Figure 15: Decision to choose any brand...................................................................5
Figure 16: Influencer of Recommendation.................................................................5
Figure 17: Ad recall....................................................................................................5
Figure 18: Ad influence on action...............................................................................5
Figure 19:Parameters for buying glass.......................................................................5
Figure 20: Awareness of application of glass.............................................................5
Figure 20: Awareness of application of glass

10 | S u m m e r P r o j e c t R e p o r t

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List of Tables
Table 1 : Domestic Float Glass Sales.........................................................................5
Table 2 : Total Capacity.............................................................................................5
Table 3 : Break-up of Capacity...................................................................................5
Table 4 : Market Share...............................................................................................5
Table 4 : Market Share


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Abbreviation

SGG SAINT GOBAIN GLASS INDIA LIMITED

AIS ASAHI INDIA GLASS LIMITED
GGL GUJRAT GUARDIAN LIMITED
MODIGUARD GUJRAT GUARDIAN LIMITED
TPD TONNES PER DAY
MT METRIC TONNES
Ad ADVERTISEMENT


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Abstract

Asahi India Glass Ltd. (AIS) is the largest integrated glass company in India, manufacturing a
wide range of international quality automotive safety glass, float glass, architectural processed
glass and glass products.

AIS is jointly promoted by the Labroo family, Asahi Glass Co. Ltd., Japan and Maruti Suzuki
India Ltd. AIS have the following three Strategic Business Units (SBUs):

• Automotive Glass Unit – AIS Auto Glass

• Float Glass Unit – AIS Float Glass

• AIS Glass Solutions Ltd – AIS Glass Solutions

The Indian Glass Industry is still at nascent stage and it is rapidly developing. The glass industry
is very organized. The business environment is getting more competitive by the entry of new
players beside the three major companies as Saint Gobain, AIS and Modiguard.

Problem statement

The impact of advertisement on the demand of commodity product specifically Glass is to find
out. India is the only country where glass as commodity product is being advertised on TV. But
their effectiveness in impacting consumers mind for using more glass is not clear. How the ad
affects the market share and perception of the glass in the mind of consumers is to be figured
out.


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Scope of the Study

The study will be conducted in India with limited scope of A and B class cities where 80%
(building material) commodities are sold. Primary focus of the study will be on Glass. The most
of the survey is limited to Mumbai and nearby city around it.

Literature survey

This is the most researched topic and various methods were adopted to check the effectiveness
of advertising by different researchers. But that previous research has not speciﬁcally measured
the impacts of advertising and brand value, and their joint effect, on ﬁrm performance for the
glass kind of commodity product. We could not find the study which talks the likeable attributes
in commodity products like glass. What exactly customers are looking for in a glass? By
examining the effects of advertising and brand value, our work contributes to the existing
literature.

The Research Problem

The research problem is to find out the impact of advertisement on demand of commodity
product specifically glass.

Research Objective

Based on the problem statement, the research objectives are:

• To find out whether consumers are really involved in Glass buying decision if yes then to
what extent?
• To find out, Are consumers really aware of any Glass or cement Co, brand or Glass
products?
• To find out Does advertising has any impact in the minds of consumers?
• Can the advertising be measured or connected with a equation to the top and bottom line
of the company.


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Research is going to be descriptive as well as applied in order to achieve the desired objectives.
The null hypothesis and the research hypothesis has been developed keeping assumption that the
research will be specifically for the commodity product glass and keeping all the factors
affecting the glass busying constant other than advertisements.

The null hypothesis and alternate hypothesis is prepared to prove the research objectives.

After the research study we should be able to judge the above hypothesis by accepting or
rejecting it. The result will tell us about the effectiveness of the advertisement on glass
(commodity product) and should also explain the awareness on the different glass brands.

The Research Design

Research is going to be descriptive as well as applied in order to achieve the desired
objectives. Most of the objectives will be derived from the primary data after the survey. Focus
group, stratified sampling technique in A and B class cities particularly Mumbai and its nearby
cities will be surveyed.

Research approach

In this study, both sample survey and statistical approaches will be applied to collect data and
establish the relationships between variables of interest.

Sources of data

Both secondary (documents and records) and primary (a sample survey of customers and
channel partners in this case) data sources will be used in this work.

Research instrument

The structured questionnaire will be used for the survey. The SPSS tool is being used for the
analysis purpose. The complete research study will be done in 8 weeks parts.


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Recommendations

• The commodity market has very less involvement of the end consumers in the buying
process , hence the company should push dealers and retailers through different
schemes , gifts and by giving them awards of “Best Retailer of the Year” and “Best
Dealer of the Year” awards. The visibility at the retail counter should be increased by
giving them pad, cutting tools to carpenters via retailers having AIS inscribed on it.

1. The companies can provide booklet containing samples of glass to carpenter to push their
products and increase their brand awareness. They can organize some kind of training on
new design to carpenters. They should distribute danglers, calendars to retailers shop.

2. They can put their videos on “You tube “to increase the awareness. The company should
project their positioning statement “See More, See Clear “in their advertising media.

3. The company can direct its advertisements through different channels towards these
functional benefits of glass. They should organize meets and exhibition with retailers,
The mode of communications like PR, sponsorships to events will be good method to
create the awareness.

4. The advertisements activities should be targeted on the middle segment. The awareness
can be increased by through tie-ups with the social society/community like BMC and
CARE to increase the awareness level among the middle income category.
5. They can also have the tie-ups with the known builders and architects to advertise their
brands on their websites. Different festivals should be targeted for the awareness.


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Industry Overview

Float Glass Industry in India
India with more than one billion people, one sixth of the world’s total population has
become an attractive destination for investment in Glass Industry for some time, it
contributes around (6 %) one sixteenth of the world’s total Gross Domestic Product. It is
one of the largest economies of the world that had a middle-class consumer market in
excess of 300 million people. With increasing purchasing power and development of
service sector, India is definitely on the radar of all the glass manufacturing companies.

Float glass Industry in India is relatively new; the first float glass plant was established as
recently as 15 years back. In this period India has emerged an important player in float
glass production and today there are six float lines in operation and five new lines are at
different stages of completion. It goes without saying that the rapid increase in demand
during the late 1990s due to construction activities, in addition to provoking a cutback in
exports, charmed some international firms which now are the major producers of float
glass in the country.

India had been using sheet and lower quality float glass through ages. Secondary
processing was negligible with the majority of glass being installed in basic, monolithic
form such as casting glasses. Until 1992, only sheet glass was being manufactured in the
country, with a limited quantity of float glass being imported. In 1993, the first float glass
plant was set. Since then new varieties of float and sheet glass capacities have been
added. Against decades of old practice of casting glass in sheets over plain surfaces, the
technology of float glass had brought about a significant change in the production and


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use of glass. The switch from low quality sheet glass with limited range and thickness to
the sophisticated float glass took place in just a decade.

Totally, the flat glass industry grew by about 90% between 2000 and 2007, resulting in a
compound annual growth rate of 11%. The per capita consumption of glass, which was
0.41 kg in 1999, reached 0.80% kg in 2007. The demand for flat glass in India has
increased at an average rate of 12 percent to 15 percent each year for the past five years.
Respective market share of float and sheet glass is 89 percent and 11 percent. However,
the greater proportion of sheet and lower-quality float capacity will gradually phase out
and be replaced with high-quality float. The two main consuming sectors of flat glass in
India are the construction and automotive industries, both of which have been
experiencing hyper growth for the last five years.

User Segments
Eighty-three percent of the glass produced is used in the construction industry, 15 percent
in the automotive industry and 2 percent in miscellaneous industries such as furniture and
photo frames. The automobile industry, four-wheelers, has registered 18.6 percent
growth between January and November 2007. The construction sector is growing around
12 percent per annum. India exports about 13,000 tons of glass per month to the Middle
East, African countries, Europe and South America. The rapid increase in the demand for
flat glass in the domestic market has resulted in a cutback in exports by as much as 60
percent in the last couple of years.

Major Producers
The major producers of float glass in India are three foreign joint ventures and an Indian
company:
Asahi India Glass Ltd Taloja, Maharashtra, Roorkee, UP; Asahi India’s two plants
produce 500 tons and 750 tons per day. Asahi India Glass Ltd. It started operations in


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December 1994. It started off as a joint venture between the Tatas and Asahis of Japan.
With the exit of the Asahis in 2003, it was taken over by Asahi India Safety, the
automotive glass manufacturing company. The merged entity is known as Asahi India
Glass Ltd. The company started a new float plant with a 750-ton capacity on Jan. 1, 2007
at Uttaranchal in North India.

Saint-Gobain Glass India Ltd., Sriperumbudur, Tamil Nadu; Saint-Gobain’s two
plants produce 550 tons and 700 tons per day. It started operations in 2000 and is India’s
largest capacity float plant.It is a 100 percent subsidiary of the Saint-Gobain Group

Gujarat Guardian Ltd., Ankleshwar, Gujarat, Gujarat Guardian, the first company to
set up float glass plant in India produces 550 tons per day; It is a joint venture between
Guardian Industries International Corp. of the United States and India’s Modi Group.

Triveni Glass in Allahabad produces 200 tons of float glass per day. It’s a mini float
plant based on Chinese float-glass technology.

New Entrants
Other than these four established players, a few domestic companies too are venturing in
Float glass production; there float lines are at various stages of completion. All the three
new players are related to glass industry.

Gold Plus Glass Limited- Gold Plus glass is a New Delhi based glass processor, and has
a significant market share in processing glass industry, announced that it’s Roorkie based
latest float glass manufacturing plant of Gold Plus, would start production in June, 2008.
The furnace may be fired on any suitable day in June; 2008.The estimated cost of this
project is approximately Rs.400 Crores in the first phase. The capacity of this float glass
production line would be 460tonnes per day. This float glass production line will produce
clear and green tinted glass from 2 to 19mm thickness. Most of the machineries for this


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plant are from Europe and America and Yaohua Glass Group of China.
Sejal Glass – another prominent manufacturer of value added glass, based in Mumbai
( Western Coast) has ambitious plans to set up a Float Line. The factory site is at
Bharuch, for which the construction has already begun and production will commence
from March 2009. The plant will undertake manufacturing of Clear and Tinted Glass

HNG Float glass - Hindustan National Glass company, the leading manufacturer of
container glass in India, made the announcement of setting its float glass plant in Dec.
2007, in Halol, Gujarat. Capacity of this line will be 600 Ton/day and is expected to be
on stream by middle of 2009. In its press release the company stated that equipments
would be sourced from European suppliers.

Current capacity versus demand in India
An excess capacity of raw glass in the industry was experienced in the beginning of
2006. This excess capacity could become larger in the years to come if current
investment plans see the light of day. In 2007, the excess capacity was four times that of
2006, and in 2008 it could be six times that of 2006. This is assuming demand continues
to grow at the current double-digit pace. It is interesting to note that the cumulative profit
of flat-glass manufacturers in India is still in the red.

Future Prospectus
The construction and automotive industries are the most important consuming sectors,
almost 80 million square feet of land in India is earmarked for shopping malls, taking
into consideration Special Economic Zones and Corporate offices, there is an immense
opportunity in Indian Glass industry. Nowadays, taking climate, safety, sound
attenuation, energy conservation and aesthetics into consideration, builders are opting for
more glass in their construction. The glass revolution is also taking place in the
automotive industry which is predicted to grow at more than 15% till 2012. Anyway, it


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isn’t all roses for Indian glass industry, problems like the overcapacity of raw glass (and
a projected surplus of processed glass); Chinese competition (in spite of anti-dumping
duties) and the lack of codes of standards threaten Indian glass industry. As far as
overcapacity concerned, analysts say that the supply will far exceed demand at least until
2009. Excess capacity, increased competition and the development of a regulatory
framework are the real future challenges for the Indian glass industry.

Current Scenario
The domestic glass industry and trade has been progressing at a consistent impressive rate of
growth of 12-13% per annum during the last nine years. However this progress has come to a
rude halt in the fourth quarter of the current financial year 2008-2009 and the rate of growth has
turned negative. During the last financial year 2007-08 all the three float glass manufacturing
companies operating in the country – SGG, GGL and AIS had combined sales of 2043 tonnes
per day of float glass on an average. However , during the fourth quarter ( January- March ) of
the current financial year 2008-2009 this has slide to 1885 tonnes per day on an average having a
negative growth rate of -8.38%( Glass Yug magazine, January Edition- 2009).

Year MT/Day %Growth

2000-01 886 2.66

2001-02 980 10.6

2002-03 1106 12.85

2003-04 1310 18.44

2004-05 1427 8.93


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2005-06 1402 14.22

2006-07 1695 20.89

2007-08 2043 20.46

2008-09 ( Jan-Mar) 1885 -8.38
Table 1 : Domestic Float Glass Sales

The float glass sales trend shows that from past nine years sales was increasing continuously,
but due to economic slowdown and recessionary condition it has decreased in the beginning of
2008-09 turning into negative growth rate in the sales .

Figure 1: Domestic Float Glass Sales

Figure 2 : Sales Growth of Float Glass

The total capacity of including all the major float glass companies in India comes 4650 tonnes
per day. Out of which the three major companies like Saint-Gobain Glass India Ltd. has 1400
tonnes per day, Asahi India Glass Ltd. with 1200 tonnes per day and Gujarat Guardian Ltd. with
550 tonnes per day. The other three companies Gold Plus Float Glass Industry Ltd., H.N.G Float
Glass Ltd. and Gold Plus Float Glass Industry Ltd. have corresponding capacity of 550, 550 and
400 tonnes per day.

Total Capacity ( in tonnes per day)

Manufacturers Capacity( in tonnes per day)

Gujarat Guardian Ltd. 550

Asahi India Glass Ltd. 1200

Saint-Gobain Glass India Ltd. 1400


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Gold Plus Float Glass Industry Ltd. 400

Sejal Architectural Glass Ltd. 550

H.N.G Float Glass Ltd. 550

Total Capacity 4650

Domestic Sales on an average/day 1885

Export sales on an average/day 350

Domestic + Exports 2235

Extra Supplies or Stocks 2415
Table 2 : Total Capacity

Figure 3 : Company wise capacity of production

So far as the concern of export sale, SGG and AIS are the performing extremely well by
recording export sales of more than 700 tonnes per day on an average while the export figure for
GGL is negligible as its production capacity is limited to 500 TPD. The total capacity gets
absorbed mostly in domestic market with 1885 mostly whereas export sales per day are 350
TPD. The extra supplies or stocks are 2415 tonnes per day.

Break-up of Capacity ( in tonnes per
day)

465
Total Capacity 0

Domestic Sales on an average/day 188


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5

Export sales on an average/day 350

241
Extra Supplies or Stocks 5
Table 3 : Break-up of Capacity

Figure 4 : Break-up of Capacity

Market Share
The SGG has the highest market share of 38.89%, whereas AIS stands second with 31.52 %
market share. The GGL has 23.23% market share and the Gold plus float glass Industry Ltd.
covers 6.37% market share.

Float Glass : Market Share ( Domestic
Market )

Market
Manufacturers Share

Saint-Gobain Glass India Ltd. 38.89%

Asahi India Glass Ltd. 31.51%

Gujarat Guardian Ltd. 23.23%

Gold Plus Float Glass Industry Ltd. 6.37%


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Table 4 : Market Share

Figure 5 : Domestic Market Share


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Company Profile
AIS is the largest integrated glass company in India, manufacturing a wide range of international
quality automotive safety glass, float glass, architectural processed glass and glass products.

AIS has a strong strategic position in the Indian glass industry. AIS is a leader in auto glass and
architectural processed glass segments and has prominent position in Float glass market.

AIS is jointly promoted by the Labroo family, Asahi Glass Co. Ltd., Japan and Maruti Suzuki
India Ltd. The promoters jointly hold 55.24% of paid up equity capital of AIS, with remaining
44.76% held by public.

Being a widely held listed public company with close to 62,000 shareholders, AIS remains
committed to maintain the highest standards of corporate governance and shareholder
accountability. The equity shares of AIS are listed on the Bombay Stock Exchange (BSE) and
National Stock Exchange (NSE) in India.

AIS is transforming itself from being a manufacturer of world-class glass and glass products to a
solutions provider by moving up the value chain of auto glass and architectural glass and
providing design, products and services that make glass more versatile and user-friendly.

AIS have the following three Strategic Business Units (SBUs):

• Automotive Glass Unit – AIS Auto Glass

• Float Glass Unit – AIS Float Glass

• AIS Glass Solutions Ltd – AIS Glass Solutions

AIS Auto Glass is India's largest manufacturer of world class automotive safety glass and is, in
fact, one of the largest in the field in Asia. It meets over 80% automotive glass requirement of
the Indian passenger car industry.


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AIS Float Glass is the leading manufacturer of international quality float glass in the country.
Prior to its merger with AIS, it was known as Floatglass India Ltd.

AIS Glass Solutions is a value addition in the architectural glass business of AIS, addressing the
following segments:

• Architectural Processing and Glass solutions
• Product and Knowledge development
• Glass Services – Sales & Marketing

The market and technology leader in the Indian Glass Industry, AIS continues to add to its
customer base and service offerings, while maintaining and enhancing product quality

Its ongoing efforts, to provide high quality products and reliable and excellent service to its
customers, are the key factors for AIS’s sustained success and leadership position in the Indian
glass industry.

AIS recorded gross sales and operating profits of Rs. 11742 millions and Rs. 2046 millions
respectively for the year ended 31st March, 2008.

Vision and Mission

Vision
AIS’s Vision is to “SEE MORE”

This byline captures AIS’s culture:

• It describes AIS products and services which delight its customers by helping them see
more in comfort, safety & security.
• It expresses AIS’s corporate culture of merit and transparency.
• It defines the quality of AIS’s people to want to see, learn, and do more, in depth and
detail to transcend the ordinary.


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Mission
AIS’s Mission is “JIKKO” – Execution for Excellence

With major investments in place, the time is now to reap the benefits by execution for excellence

Guiding principles
All actions of AIS are driven by the following guiding principles:

• Creation of value for Shareholders
• Customer Satisfaction
• Respect for Environment
• Use of Facts
• Continuous Improvement
• Strengthening of Systems
• Upgradation of Human Potential through education and training
• Social Consciousness

Collaborators

Asahi Glass Co., Ltd., Japan

Asahi Glass Co. Ltd, Japan, was established in 1907. Today, it is one of the leading glass
producers of the world. AGC has a global network of over 350 subsidiaries and affiliates in
Japan and 20 and above other countries. The group’s operations comprise of flat glass,
automotive glass, and have recently diversified into display glass, chemicals, electronics and
energy.

AGC has evolved as a top multinational glass manufacturer with a leading share of the global
market in most key glass products. AGC group is the largest glass manufacturer of the world


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with 12% global market share in the flat glass segment and 30% global market share in the
automotive glass segment. It has further captured the top share in CRT glass, TFT display glass
and PDP glass in the display field as well.

For the year 2007, the AGC Group has recorded net sales of 1681 billions of yen, and with
Operating Net Income of 69 billions of yen.

SBU’S

AIS Auto Glass
OVERVIEW

AIS Auto Glass is the most reputed and trusted supplier in Indian automotive glass industry
having over 21 years of technological expertise and is the largest manufacturer of world-class
automotive safety glass in India.

AIS Auto Glass has been awarded the prestigious Deming Application Prize, 2007, certifying
the outstanding performance improvements achieved by it through application of Total Quality
Management (TQM).

Today, AIS Auto Glass has a ‘body of knowledge’ to be able to deliver ‘cutting edge’ auto glass
solutions and value addition to its customers, most of whom are global and demanding players.

AIS Auto Glass is overwhelmingly the ‘first choice’ supplier for most automotive manufacturers
in India. Hence, AIS Auto Glass is either the sole or a leading supplier of auto glass to most
passenger car manufacturers in India, supplying about 80% of their auto glass requirement.
Apart from supplying to OEMs in India, AIS Auto Glass has significant presence in the
domestic after-market with a market share of 43%. It also exports auto glass to the after-markets
in Europe and Pakistan.


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AIS Auto Glass has state-of-the-art plants located at Rewari-Haryana, Roorkee-Uttrakhand
(North India) and Chennai- Tamil Nadu (South India) with a combined capacity to produce 2.81
million car sets per annum.


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Product Range

AIS Auto Glass is India's largest manufacturer of automotive safety glass. The unit
manufactures the full range of automotive safety glass, which includes:

• Laminated Windshield

• Tempered Glass for Side and Backlites

• Silver Printed Defogger Glass

• Antenna Printed Backlites

• Black Ceramic Printed Flush Fitting Glass

• Encapsulated Fixed Glass

• Solar Control Glass

• IR Cut Glass

• UV Cut Glass

• Reflective (PET) Windshield

• Water Repellant Glass

• Glass Antenna

• Extruded Windshield

Clients

AIS Auto Glass : Share of Business
Customer SOB (%)
Maruti Suzuki India Ltd. 100
International Cars and Motors 100


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Reva Motors 100
Honda Motors 100
Ford India 99
Toyota Kirloskar Motors 99
Fiat India 83
Hyundai Motors 72
General Motors 67
Volvo India 57
Mahindra & Mahindra 52
TATA Motors 24
Piaggio 22
Hindustan Motors 17
Eicher Motors 13
Swaraj Mazda 5
Force Motors 1

Market Position

• Sole supplier to almost the entire Indian passenger car industry, with a current market
share in excess of 80 %.

• Significant presence in the after-market with a market share of over 43%.

• Exporting auto glass to after-market in Europe and Pakistan.


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AIS Glass Solution
AIS Glass Solutions is the face of the architectural glass processing business of AIS. As a
separate business unit, AIS Glass Solutions focuses on offering innovative architectural glass
solutions to customers.

AIS Glass Solutions aims at raising per capita consumption of glass in the country to bring it at
par with the other developed countries in the world. It disseminates knowledge for increased
awareness of the use and application of architectural glass through innovative offerings.

AIS Glass Solutions has been supplying a wide range of high quality architectural processed
glass, comprising of toughened glass, laminated glass, insulated glass units and value added
glass products. It also caters to the project segment, meeting glass and related requirements of
construction projects.

Its product portfolio includes:

• AIS Strong glass - impact resistant glass.

• AIS Security glass - burglar resistant glass.

• AIS Acoustic glass - sound resistant glass.

• Glass products like shower enclosures, tabletops, shelves.

The state-of-the-art architectural glass processing facilities are located at Taloja (West India),
Chennai (South India), Rewari and Roorkee (North India). The Roorkee facility is the largest
architectural glass processing facility in the country.


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AIS Float Glass
OVERVIEW

AIS Float Glass is a premier manufacturer of international quality float glass and value-added
glass like reflective glass and mirror.

AIS Float Glass has state-of-the-art glass manufacturing plants located at Taloja near Mumbai
(West India) and Roorkee (North India) with a total production capacity of 1,200 tons per day
(TPD). Its newly commissioned unit at IGP Roorkee has manufacturing facilities for float glass,
superior quality heat reflective glass and new generation environment friendly mirror.

PRODUCT RANGE

AIS Float Glass offers a diversified product range of float glass in thickness of 2 mm - 12
mm in different shades and tints of clear, green, grey, bronze and blue in varying sizes. Its
product portfolio includes world-class range of international quality Supersilver heat-
reflective glass, the world’s finest quality "Environment Friendly" copper & lead free
premium AIS Mirrors, AIS Décor lacquered glass & AIS Krystal Frosted glass for interior
applications.


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Application Of AIS Glass

With its wide product range and its status as the undisputed quality leader, AIS Glass is
the natural choice in most of the application segments:
Window Glazing: AIS Float Glass’s superior strength, high optical clarity, distortion
free, smooth surface and bigger sizes give design flexibility, making it the natural choice
for all window glazing applications.
Curtain walls: Availability of AIS Tinted Float & AIS Heat Reflective Glass in various
shapes and sizes enable you to design the latest in curtain walls. Besides modern
expression, it reduces the overall dead weight of the building, allows faster construction
and requires less expensive maintenance. The heat-absorbing / heat-reflective
characteristic reduces the air-conditioning load substantially, thus saving precious
energy.
Partition Walls: Due to its inherent strength and availability in large sizes, AIS Float
Glass can be extensively used for partitions. Glass partitions add to the aesthetics of the
room and give a feeling of spaciousness.

Doors: AIS Float Glass is extensively used in doors and entrances, exuding beauty and
elegance.

Shop-Fronts: Brilliantly clear and transparent shop-fronts made of Float Glass provide a
distinct image to a showroom.

Decorations: Modern expression, transparency, easy maintenance and non-
inflammability of AIS Float Glass makes it an indispensable material for display cabinets
Shop, partitioning, screening and designing modern and high-class Showrooms and
Shopping Malls.
Furniture: AIS Float Glass, due to its versatility, is ideal for furniture, tabletops,
shelves, cabinets, showcases and sliding doors of large almirahs and cupboards etc.


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Balustrades: The use of AIS Float Glass in balustrades gives a graceful effect to the
staircases.
Mirrors: AIS Float Glass gives perfect reflected images when mirrored. Also AIS
Mirrors, are world-class quality mirrors, being copper & lead free and corrosion
resistant.
Automobile Safety Glass: AIS Float Glass Unit is the single largest supplier to the
OEM segment. Its European Green glass is used extensively in almost all premium cars.
Special Applications: AIS Float Glass can be further processed to be used for skylights,
atriums, museums, art galleries, aquariums, lifts, dance floors etc.

MARKET POSITION

AIS Float Glass enjoys 38.89 % market share in the Indian float glass market.

CLIENTS

The diversified product portfolio of AIS Float Glass includes float glass in varying sizes,
shapes and thickness. AIS's quality products make it the preferred choice of a wide range
of clients including


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• Automotive Safety Glass Manufacturers

• Processors

• Dealers and Retailers

• Architects

• Interior Decorators

• Builders

• Aluminium Fabricators

• Carpenters

• Furniture Manufacturers

• Household Consumers
With glass finding applications in an array of arenas, the client base of AIS Float
Glass is an ever-expanding one.

Advantages of Float Glass over its Counterparts

Fuel Efficiency

The fuel efficiency is enhanced significantly in a float glass plant. Whereas in a sheet
glass plant, the best fuel efficiency is limited to 0.3 MT of furnace oil per tonne of glass, in the
float process, 0.18 to 0.20 MT of furnace oil is required to melt 1 tonne of glass.


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Quality

Owing to the greater degree of quality control in the furnace conditions, the final product
is free from body defects such as waves, stones etc. The reason for this lies in the process itself:
the molten glass is formed on a bed of molten tin, improving the accuracy of glass immensely.
In the other processes, the molten ribbon of glass is drawn out mechanically between rollers,
making it vulnerable to variations in thickness. Thus the float process offers better quality.


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Control

Because the product passes horizontally from one chamber to another, a greater degree of
inspection and quality control can be exercised unlike the other process where the glass is pulled
up against the force of gravity.

Variety

The float glass can be manufactured with thickness upto 19mm, to be used for applications such
as tabletops; furniture etc.This is not possible in sheet glass, as the glass would become brittle at
such high thickness.


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Market Research

Background
In the present era of cut throat competition there is a very little scope left out for the
companies to create differentiation in the products to compete, hence need to start brand
building exercise by way of creating perceived images of superiority over the competition . This
starts with the various kind of activities to be undertaken by the companies to create brand ,
among them one way is advertising. Indian commodity market ( in the building material
segment )such as cement, steel, aluminum, Glass has adopted various methods to enhance the
demand for their products, they have simultaneously invested sizeable amount of money in
advertising to sell their products and increase their market share. VARIOUS consultants and
advertising agencies were hired to create a difference but, “have they been successful in their
efforts to create demand or make any kind of impact on the demand or sale due to advertising or
mass media campaigns. Lots of subjective discussions (simply based on individual feelings and
selected market researches to show the positive impact, which can easily be contradicted by any
other agency or market research) have taken place and actually not yielded any results or
tangible benefits which can distinctively be observed or verified. Whenever organizations try to
establish a relationship between the advertising and the Top line, bottom line then efforts are put
in to de link it so that it goes to the expenses part rather than become a part of the cost. There is a
need to re-examine and evaluate the impact of advertising on the demand of commodity
products and see what exactly consumers are looking for. Once companies understand that
branding is a necessary (and profitable) part of doing business, the next logical question is —
how do you brand?

Tactically speaking, there are numerous ways to go about branding. The look and feel of
the communications, the balance of advertising versus public relations versus grassroots, the


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media used, etc., all reflect tactical aspects of the branding process. However, these are only
vehicles used to brand, and do not inherently lend themselves to developing a brand, per se. To
ensure a good, successful brand is the methodology used to develop and/or refine the brand in
the first place. In other words, just like a building, a good brand starts with a strong foundation.
Sound branding practice begins with addressing five key attributes present in any effective
brand: uniqueness, relevance, credibility, sustainabiiity, and practicality.

Uniqueness

The average American is exposed to approximately 3,000 advertising messages per day.
That means everything from the logo on your watch, to product placement in television and
movies, down to traditional commercials and print ads. And all this static is in addition to
children, family, job and various other aspects of everyday life that are constantly vying for
attention. To break through all of the clutter, a brand has to stand out, has to be memorable — it
has to be unique.

Relevance

This attribute seems like a no-brainer, but it is an important check-off. If a brand is
positioned in a way that has no bearing in the life of the audience, then how can the audience be
expected to develop an affinity for the brand?

Credibility

Things can be true, but not necessarily believable. For instance, Kia brand automobiles
could spend hundreds of millions of dollars on the development of a luxury car that rivals BMW
in every aspect. However, it is a good bet that such an endeavor would fail. At the very least, Kia
could only command a fraction of the retail price of BMWs. The Kia brand has successfully
positioned itself as a low-cost automobile maker. People would simply not believe the company
had produced a car that was on par with BMW. The lessons here — don’t let your business stray


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from your brand. Once credibility in your brand is lost, it is near impossible to regain it. Just see
Arthur Andersen, WorldCom or Enron.

Sustainability

This factor represents the most significant difference between advertising and pure
branding. An advertising campaign is finite, while a brand should theoretically be credible and
relevant forever. The core values inherent in a brand should reflect core human values. For
example, Nike's core value is achievement. McDonald's core value is convenience. Citibank’s
core value is financial security. These values will be as relevant as in 2055 as they are in 2005,
which gives the brand consistency, staying power, and the ability to build consumer loyalty.

Advertising remains one of the cornerstones of marketing communications. However,
determining its impact on a firm’s performance continues to be a difficult proposition for many
marketing and advertising managers. Although firms in the USA spent over $230 billion on
advertising in 2001 (Coen, 2002), a clear link Between advertising expenditures and financial
performance remains somewhat Uncertain in many cases. One common belief is that
advertising creativity is an Essential element of advertising success (El-Murad and West, 2004;
Smith and Yang, 2004) and may lead to an improved financial performance, that is, as firms
focus more resources and develop more creative advertising, they will realize marginal benefits
in the form of higher sales, an increased market share and higher future earnings. While
seemingly reasonable, this particular belief fails to provide much more than an anecdotal basis
for determining the effects of advertising on a firm’s bottom line. While providing some useful
insights, these mostly academic studies typically failed to take into consideration the myriad of
other variables that also affect advertising effectiveness (e.g. differentiating message, repetition
and recall).


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Introduction
Can Advertising Contribute?

On the heels of what seems to be a never-ending series of attacks on advertising, two
new studies purport to reveal more evidence of its diminishing impact. For several years,
respected industry leaders have been assailing both advertisers and their agencies for lack of
performance. Some experts, such as Sergio Zyman, former advertising head at Coca-Cola, claim
that ad agencies have abandoned their basic responsibility to sell the brands they're paid to
advertise. Others, including noted author Al Ries, have gone even further, contending that
advertising's business building capabilities now pale in comparison to the "buzz" public relations
can generate. (See "Is Advertising Dead?" Adding fuel to this fire are two recently released
studies. The first, by Yankelovich Partners, maintains that the effectiveness of ad campaigns has
been declining markedly. It cites as evidence the apparent growth in consumers' negative
perceptions of advertising. According to Yankelovich, about 6 in 10 U.S. consumers report that
they now feel more negatively about advertising than they used to. Furthermore, they claim to
"avoid buying products that overwhelm them with advertising and marketing."
The second study, recently released by Deutsche Bank, is based on a more wide ranging
analysis of sales and marketing spending data. It concludes that TV advertising delivers, in most
cases, a negligible return on investment (ROI) for mature package-goods brands. According to
the Deutsche Bank data, only 3 of 18 major brands competing in established product categories
(ranging from beer to detergent and from snacks to toothpaste) could demonstrate financial
returns that exceeded the company's investments. In the other 15 cases, the companies were
simply spending more money than they were making. No bang for the buck Reports such as
these have caused consternation among advertisers and the agencies they've enlisted to create
and deliver sales-building and business-enhancing messages. Wall Street analysts and company
boards are increasingly expecting and demanding accountability for marketing expenditures. If,


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as the Deutsche Bank data contend, major advertisers such as Coca-Cola, Heinz, and Colgate are
realizing no tangible business benefits from their expenditures, then ad money will likely be
reallocated to other, higher-return uses. The dilemma, of course, is to identify what those
alternatives might be. According to the Deutsche Bank report, the solution is not an increase in
trade-promotion spending, as this tactic also falls short when it comes to ROI. So where are
companies to turn? What are these studies telling today's brand marketers? Perhaps, as some
have suggested, the solution is simply "better advertising." The argument is that the money is
squandered -- not because all Advertising is wasteful, but because too many companies have
been lured into creating ad campaigns that just don't work. Either marketers are employing the
wrong media mix (for example, relying on expensive and inefficient TV commercials), or
they're relying on the wrong selling strategies (such as creating messages that have little or no
potential impact). Does a company's advertising just need to "work harder"? Or is the real
problem that today's advertisers are heading in the wrong direction, and as a result, are making
no apparent progress toward meeting their ROI challenge? It appears that far too many
companies operate under an incomplete or erroneous model of how advertising can best
contribute to building a healthier brand. Consequently, they fail to hold their ads -- and their ad
agencies -- accountable for the end results they should be delivering.
Consider the Yankelovich study, which apparently equates "liking" advertising with its
impact. The study suggests that if people say they're feeling increasingly negative toward
advertising, then that means that advertising has increasingly less impact. This argument would
imply that the solution for enhancing the return on advertising expenditures would be to make
the ads more entertaining and fun to watch, hear, or read. But should that be the goal? Is
advertising's real purpose to entertain -- or to sell? As experts from David Ogilvy to Sergio
Zyman have pointed out, advertising's objective is not to be "fun to watch." Entertaining
consumers is not the reason companies invest billions of dollars in ads. Customer acquisition or
customer retention? What should advertising's goal be? What are the appropriate objectives for
today's marketers to pursue? These are the questions that marketers must answer as they rethink


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their targets and reexamine their strategies. Some time ago, companies began shifting their
emphasis from customer acquisition to customer retention. That's because myriad published
studies have emphasized what has now become a management mantra: It costs a lot less to keep
a customer than it does to acquire a new one. (See "The Constant Customer" and "Maximizing
Return" in See Also.) Yet the goals that many companies set for their advertising have remained
essentially the same as they were decades ago, when brands were being launched and the aim
was to attract new customers. What are these stated objectives? What do today's marketers
demand of their ad agencies? They want agencies to build brand and advertising awareness,
increase consumers' positive attitudes toward identifiable purchase motivators, and boost the
number of customers who state a positive intention to buy the brand.
But these measures all derive from a time past, when package-goods companies were
defining what marketing was all about (the "Four Ps" of product, place, promotion, and price)
and focusing on building brand share for frequently purchased, low-involvement consumer
products. And they were pursuing these goals through advertising that was designed and
executed to increase the brand's profile and make it more "top of mind." But those outcomes are
not the hallmarks of increased customer retention. Rather, they are indicators of the potential for
customer acquisition. As several Gallup Organization studies have pointed out, the health of a
company's customer relationships is reflected in the nature and depth of the emotional
connections that have been forged between the brand and the customer. (“Beyond Customer
Loyalty”) Brand awareness is an insensitive and even inappropriate indicator of the strength of a
company's customer relationships.
However, that may be exactly why the Deutsche Bank study has concluded that
advertising typically doesn't work for mature brands in mature categories. What should the role
of advertising be for brands such as Coke and Heinz? Should their ads focus on increasing the
awareness of these already-familiar names? Or should they seek to deepen and extend brand
relationships by enhancing the engagement of their current customers? The problem with
attacking the issue of advertising that reportedly doesn't work is that too many companies are


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still defining what works according to an outmoded customer acquisition model. They are
looking at what it takes to generate trial, and that's a mistake. In a world that's now strongly
focused on customer retention, advertising must be designed, crafted, and held accountable for
its ability to enhance the customer relationship, not just initiate it. This means that company
marketers -- at least those who are marketing established brands -- must rethink not just what
they're spending, but what they're doing, what they're saying, and how they're monitoring their
progress. Unless advertisers and their agencies reexamine where they're heading and reconsider
what they're striving to achieve, marketers will continue to read bleak and scary reports about
advertising's lack of impact and effectiveness. Ad expenditures, already clearly in jeopardy, will
decline. And the real promise and potential of advertising will, sadly, continue to be left
unrealized.

Marketers are too willing to concede that their products have reached commodity status.
That's a major reason why advertising effectiveness has suffered mightily. Here's the problem:
When companies treat their brands the same as their competitors', they no longer focus on
attributes of the brand itself as reasons to buy it. Instead, they talk about the people who buy the
product, or they make fun of the advertising -- anything to keep from admitting that their
product purportedly has no real advantage over the next guy's. So, when advertising is forced to
get away from concentrating on what makes it most effective and efficient -- tangible and
meaningful product benefits -- the result is likely to be disappointing.

It's amazing how sophisticated marketers make this mistake. The contention is that they are
selling their products short; that their products have advantages that can be exploited by great
advertising if only their custodians would look harder for the hidden gems buried deep within
the product -- or maybe just under the surface.

Although the agency is only too happy to oblige, the client is clearly the place to lay the
blame. After all, if the top guys at Miller Brewing Co. had insisted that their agencies dig out


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and exploit attributes of their beers, instead of the weird people who drink their beers, they
would be gainfully employed today.

The agencies, of course, were glad to be let off the hook. It's hard work to come up with
an advantage that can give a product an edge and convey that advantage in a meaningful,
creative and entertaining way. How much easier to ignore the product altogether and focus on
the lifestyles of the consumers who use the product. That way, you can say anything you
want.It's easy to go down the road that says most products are the same. You see that most often
when companies are floundering.

Kellogg Co. is a sad case in point. Its troubles started when the cereal companies
drastically lowered the prices on their products, giving consumers the impression that they were
all the same. (Kodak did the same thing with its film.)

When that line of thinking takes hold, management starts looking for non-product-related
things to talk about. So now, the head marketing guy at Kellogg concedes that, because "the
functional benefits are the same" from brand to brand, Kellogg is intent on creating a personality
for each brand -- and a relationship with its consumers.

If the "functional benefits" of a brand are all the same, how can the brand's personality be
distinct, other than by fabricating it out of whole cloth? A brand's uniqueness comes out of its
real and tangible product advantages.

“The moral of the story is that few consumer products are commodities unless their
owners concede that they are”. And because so many companies today are making that
concession, smart marketers have a terrific new weapon at their disposal.

Marketing is at the top of the list because this is the area where rigorous financial
evaluations have not been used extensively to justify the expenditures within a firm.
Manufacturing costs have been reduced from 50 per cent to 30 per cent, and general
management costs have also declined as a proportion of the total corporate costs from 30 per
cent to 20 per cent, but in contrast to manufacturing and general management costs, marketing

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costs have increased significantly from only 20 per cent of the total corporate costs 50 years ago
to 50 per cent today. In spite of the huge marketing expenditures, managers frequently do not
have concrete measures or knowledge of what is obtained in return from a significant investment
in marketing. Moreover, many have doubted that definite quantitative measurements of
marketing effectiveness could ever be made

Problem Formulation
The impact of advertisement on the demand of commodity product specifically Glass is
to be find out. India is the only country where glass as commodity product is being advertised on
TV. The huge amounts of investment in ads are happening in the industry. But their
effectiveness in impacting consumers mind for using more glass is not clear. Do the
advertisements help the company in commanding more market share, has become the main
issue. The connection of ad to the top and bottom line of the company is not yet established
clearly for the commodity product such as glass. The perception of consumers towards glass is
still very traditional as that of fragile nature etc. The relationship between glass buying behavior
and the awareness towards the brand among the commodity glass market is to be figured out. All
these issues are the rationale behind choosing this research study.

Literature Review
RIEDESEL (2002) COMMENTS that the modeling of company sales and income as a function
of three types of media spending using Data Envelopment Analysis (DEA) by Luo and Donthu
(2001) is questionable. He acknowledges that the relationship between media spending and
company sales may be reciprocal, but the impact of sales on media spending is more direct than
vice versa. First, there are numerous marketing, management science, econometrics, and
advertising studies that have established the causal relationship from media spending to sales
volume ( Aaker and Carman, 1982; Feinberg, 2001; Mesak, 1999; Simon and Arndt, 1980;
Stewart, 1989). Danaher and Rust (1994) theoretically propose that optimal level of media
spending can be achieved by maximizing the advertising productivity/efficiency. Following this


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school of research, we believe that the amount spent on different media such as broadcasting,
print, and outdoor can be treated as DEA inputs, while sales and income as DEA outputs.

Second, while some firms may be using a fixed percentage of previous sales as current
media spending budget, the approach is ad hoc and not supported by science. One hopes that
many firms are actually setting advertising budget based on future sales goals. However,
irrespective of how advertising budgets are set, advertising expenditure may or may not be
efficient (given level of advertising may produce different levels of sales) and DEA can be used
to investigate this.

It is not the setting of the budget that creates sales but the spending of the budget. If sales
fall below or above projected levels, real-time changes have to be made in spending. DEA can
be used to model such contemporaneous spending/sales data.

Finally, a pure empiricist may argue that DEA is a correlation technique used to analyze the
relationship between two sets of variables.

In conclusion, advertising theory dictates that media spending be treated as inputs and sales be
treated as outputs. Media spending should reflect sales goals. Irrespective of how advertising
budgets are arrived at, inefficiencies exist in advertising and that inefficiency can be
benchmarked using DEA. ( Mehir Kumar Baidya and Partha Basu Measurement and Analysis
for Marketing 2008) did one study with the aim to check the impact of individual marketing
efforts (advertising, sales force , promotion, distribution and price) on sales and overall customer
satisfaction for a brand by taking into consideration both the financial and non financial aspects
of the measurement. The return on- investment (ROI) has been calculated for each effort on the
basis of sales The findings suggest that all the marketing efforts have significant positive impact
on sales except price. Moreover, all the marketing efforts have significant positive effects on
overall customer satisfaction for the brand. Furthermore, among all the marketing efforts the
adjusted ROI is the highest for sales force. These results will assist the managers in allocating


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the resources to different marketing efforts in a better manner, so as to improve the effectiveness
of marketing expenditures.

Stone and Duffy , and Basu and Batra used the judgmental and mathematical
(ADSPLIT) models to frame the relationship between sales and advertising expenditures. Both
studies used response function to allocate marketing budget to advertising as well as to different
brands.

Effects of sales promotion : (Bawa and Shoemaker) performed a study to identify the influence
of sales promotion activities on customers ’ brand choice behaviour. The authors found that sales
promotion activities have short-term and long term positive effects on the brand choice
behaviour of customers. In the same direction, Jones made an attempt to examine the short term
and long-term impact of sales promotion activities on sales by a multivariate technique
Regression model estimation indicates that the short-term effect is more prominent than the
long-term.

The author found that the effect of a low price on attracting buyers depends on the level
of advertising. The high advertising plan produces sales 50 per cent above the low plan at the
base price. At the middle price it was 34 per cent, and at the highest price with the high
advertising level it was only 11 per cent.( Effectiveness of marketing expenditures © 2008
Palgrave Macmillan Ltd 0967-3237 Vol. 16, 3, 181–188 Journal of Targeting, Measurement and
Analysis for Marketing 183).

Customer Satisfaction Studies: Anderson analysed a database matching the CSI with
ROI, and the productivity of each company covered by the Swedish Customer Satisfaction
Barometer (SCSB) from 1989 to 1992. Regression model estimation indicates that the
coefficient for the direct relationship between the customer satisfaction and ROI is positive and
significant. Similarly, Ittner and Larcker 12 extend this study by using stock price as a dependent
variable and CSI as an independent variable. The authors found that the estimated regression


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coefficient is 7.36. This shows that customer satisfaction has a positive impact on shareholder
value.

Advertising remains one of the cornerstones of marketing communications. However,
determining its impact on a firm’s performance continues to be a difficult proposition for many
marketing and advertising managers. Although firms in the USA spent over $230 billion on
advertising in 2001 (Coen, 2002), a clear link between advertising expenditures and financial
performance remains somewhat uncertain in many cases. One common belief is that advertising
creativity is an essential element of advertising success (El-Murad and West, 2004; Smith and
Yang, 2004) and may lead to an improved financial performance, that is, as firms focus more
resources and develop more creative advertising, they will realize marginal benefits in the form
of higher sales, an increased market share and higher future earnings. While seemingly
reasonable, this particular belief fails to provide much more than an anecdotal basis for
determining the effects of advertising on a firm’s bottom line. In addition, while positive returns
are expected, this type of unsubstantiated claim has become unacceptable as more marketing
managers are being asked to validate the links between traditional marketing variables and
financial performance (Jedidi et al., 1998).

Although the search for the true value of advertising has led to the completion of
numerous experimental and econometric studies, evaluating the effectiveness of specific
advertising campaigns continues to be problematic for practitioners and academics alike. For the
most part, past studies have tended to focus on a handful of ‘executable devices such as the use
of humor, sex, and celebrity presenters’ (Stewart and Furse, 2000, p. 85). While providing some
useful insights, these mostly academic studies typically failed to take into consideration the
myriad of other variables that also affect advertising effectiveness (e.g. differentiating message,
repetition and recall). Exceptions to these fairly limited studies are practitioner studies that rely
on an experimental design and use single-source data (e.g. Eskin, 1985; Lodish et al., 1995).
Such studies are able to estimate advertising performance by tracking the actual purchasing


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behaviour of a sample of consumers (via retail scan cards). However, while providing useful
insights, many of these experiments were not well documented in terms of methodology
(Stewart and Furse, 2000) and were very expensive, technically difficult to conduct and relied
heavily on the ability for tracking exact consumer purchasing patterns carefully. While both
categories of studies have helped to extend our general understanding of how advertising affects
firms’ performances, more research is needed.
Consequently, a number of empirical studies have recently been conducted in order to
extend our understanding of the links between specific aspects of a firm’s advertising function
and various financial performance measures (e.g. market share, profitability and stock price).
While market share and profitability continue to demand attention as managers attempt to link
their decisions to financial outcomes directly, many researchers have opted for a more unique
approach and have begun to examine the impact of specific marketing and advertising decisions
on expected future earnings (as manifested in higher or lower abnormal stock returns).
Specifically, researchers have explored the links between stock price and the use of celebrity
endorsers (e.g. Ohanian, 1991; Agrawal and Kamakura, 1995; Mathur et al., 1997; Farrell et al.,
2000), corporate sponsorship and the marketing of sporting events (e.g. Miyazaki and Morgan,
2001; Tomkovick et al., 2001), changing a company’s name (Horsky and Swyngedouw, 1987)
and changing a firm’s advertising slogan (Mathur and Mathur, 1996). However, while some
progress has been made in this area, more research is needed.

Managerial relevance. Jointly examining weight and content effects on market response
can be extremely appealing to brand managers who try to strike a balance between copy and
weight and may ultimately help them achieve higher advertising efficiencies. The results of
MacInnis et al. are encouraging, since they suggest that media expenditures are not a waste of
money when combined with the appropriate type of copy appeal (in their case emotional) in
mature markets. Similarly, the implications of the study by Chandy et al. [3] may help managers
in copy-changing decisions depending on the maturity of the market they compete. The


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approach suggested in Reference [7] can be used when advertising appeals are ambiguous and
need to be inferred by examining their effects on response.

Long-term effects and hysteresis

Although the long-term effectiveness of advertising has long been a popular subject of
academic research with the Koyck model being the main methodological tool (e.g. Reference
[8]), in recent years new paradigms in the study of long-term advertising effects have emerged.
Most notably, Dekimpe and Hanssens [9, 10] proposed the use of ‘persistence modelling’ to
study long-term advertising effects. Applying vector auto-regressive (VAR) models to data from
evolving markets, Dekimpe and Hanssens essentially redefine what should be considered as
‘long term’ and contrast it with the more traditional Koyck modelling approach. Koyck models
may be applied to stationary markets but their advertising effects cannot be permanent (and thus
really ‘long term’), because market performance in these markets reverts to its mean. In
evolutionary

markets, however, market performance can exhibit permanent increases and if such increases
can be attributed to advertising spending then advertising effects may be considered long term.

More specifically, Dekimpe and Hanssens [9] estimated a VAR model using home-improvement
chain sales and advertising data.

A relevant, but not identical, approach to measuring long-term effectiveness of
advertising is to examine whether it causes hysteresis, a concept introduced in the marketing
literature by Simon [12]. Hysteresis suggests that a temporary increase in advertising
expenditures can lead to a permanent increase in market performance (sales). The critical
assumption in the econometric modelling of hysteresis is that there is not a one-to-one
relationship between advertising and market performance, since decreasing advertising to its
previous level would not affect sales but increasing advertising from the same level would. In
other words the ‘sales path’ is different for decreases from, than for increases to any level of

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advertising spending. Hanssens and Ouyang [13] empirically examined hysteresis in the
computer printer market. They distinguish between full hysteresis, where temporary changes in
advertising cause permanent changes in sales without needing additional spending to maintain
the new high sales levels, and partial hysteresis, where some maintenance advertising is needed.
Their empirical results provided evidence for partial hysteresis caused by print media
advertising.

The studies by Mela et al. [14] and Jedidi et al. [15] offer an alternative approach to
studying long-term advertising effects. The first study looks at the effects of quarterly
advertising expenditures on quarterly price sensitivities, while the second examines the
cumulative effects of advertising on choice and quantity and their short-term pricing and
promotion sensitivities.

Advertising effects on stability of performance

While recent research has addressed the issue of advertising effects in evolutionary
markets, the question remains whether advertising has a significant impact on mature markets.
The results reported in Reference [5] are encouraging as they suggest that increased advertising
effort can increase sales in mature markets. However, the ‘maintenance’ role of advertising in
mature markets (see Reference [33]) should also be investigated. In other words, whether
advertising contributes to the stability of a brand’s performance, since many markets especially
for frequently purchased goods are mature The issue may be of greater importance for big
brands that would like to maintain leadership in a market but it could also be important for
smaller ‘niche’ brands that enjoy a healthy profit margin and are satisfied with their market
position. There are two possible approaches to modelling advertising effects on stability of
performance. One is to examine the effects of advertising on the variance in the performance
(sales or share) of a brand across time. If advertising is expected to increase performance
stability, it should decrease variance in performance. To make comparisons meaningful across }
It should also be acknowledged that recent research has started examining the effects of

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advertising/marketing expenditures on financial metrics (see for example Reference [29]). kFor
example, P&G, Unilever and GM are the top three media spenders worldwide. Although they do
introduce new products annually, they also support a lot of mature brands.(Copyright # 2005
John Wiley & Sons, Ltd. Appl. Stochastic Models Bus. Ind., 2005; 21:351–361 358 D.
VAKRATSAS)

The specification of advertising effects on the variance of performance should follow
from the specification of advertising effects on the mean performance (e.g. Reference [34]),
which may complicate matters. Furthermore, showing that advertising contributes to lower
variance in performance may not easily convince managers to continue investing in advertising
since performance variance is not explicitly linked to profitability.

An alternative approach to evaluate advertising’s ‘maintenance’ role would be to look
fordifferential effects of increases and decreases in advertising. In other words, a mature brand’s
performance may be resistant to advertising increases (due to ‘ceiling’ effects) but may be
sensitive (declining) to advertising decreases (due to lack of critical support). The implication
then would be that although advertising does not lead to increased performance, it helps
maintain it as declining advertising spending would result in deterioration of brand performance.
This is conceptually the opposite of hysteresis, where brand performance is resistant to
advertising decreases, as it focuses on losses in performance as a result of lower advertising
investment. Both approaches to measuring maintenance effects need sufficient variability in the
data in order to produce reliable results (see Reference [35]), which may be difficult to attain as
such studies should be carried in mature markets where managers may not change status quo
advertising practices.

Europe shows that advertising recall is lower in countries with higher levels of television
advertising. Specifically, yfield and Nazaroff (2003) report that in Denmark, where there are
only 80 average television exposures per week per person, the Millward Brown awareness index
is 150 (compared with the U.K. benchmark of 100).1 However, in Italy, where there are 300

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average exposures per week per person, the awareness index drops to only 50. Thus, an effect of
increasing advertising levels is to decrease the recall of all advertisements. In addition, academic
studies have found lower ad recall and recognition in the presence of too much advertising from
competitors (Burke and Srull 1988; D’Souza and Rao 1995; Keller 1987, 1991). Increasing
advertising content on television also increases ad avoidance behavior (Danaher 1995; Lafayette
2004), such as channel switching or time-shift viewing with a personal video recorder (Green
2003).

A commonly used term to describe the presence of high levels of advertising is “clutter.”
For television, clutter is the combination of commercials and other nonprogram material,such as
program promotions and public service announcements. The increase in clutter over the past 40
years is due to both an increase in nonprogram time and an increase in the number of 15-second
commercials (Brown and Rothschild 1993; Kent 1995). The topic of increasing advertising
clutter is one of the most publicized issues in the advertising trade literature and continues to be
one of the greatest concerns facing the advertising industry (Chunovic 2003; Lafayette 2004).
Kent (1993) makes a distinction between competitive and noncompetitive clutter. Competitive
clutter, which is also called “competitive interference” (Burke and Srull 1988; Kent and Allen
1994), is clutter that arises from advertisements delivered by competing brands (within a
category) at or near the same time and place as those for a focal brand.Kent (1993, 1995) finds
that competitive clutter has a more harmful effect on ad recall than noncompetitive clutter. In
this study, we focus on competitive clutter.

Most previous research on brand advertising interference has been conducted in
laboratory settings, in which participants are exposed only to commercials and no editorial
material (Burke and Srull 1988; Keller 1991; Kent and Allen 1994), resulting in limited external
validity. Other studies of this topic have used unfamiliar brands, which Kent and Allen (1994)
show are more prone to interference effects. Finally, previous marketing studies have examined


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the effect of competitive interference on recall, recognition, or brand evaluations rather than the
all-important effect on sales (East 2003, p. 19).

Advertising response models with managerial impact: an agenda for the future Faculty of
Management, McGill University, 1001 Sherbrooke St. W, Montreal, QC H3A 1G5, Canada
ALBA, Athens, Greece.This paper discusses recent advances in advertising response models and
identifies new opportunities for managerially relevant research. First, it establishes that recent
research has shifted attention from topics such as duration of advertising effects in mature
markets and short-term advertising elasticities to issues such as combined effects of ad content
and weight and effectiveness in evolving markets. Then, motivated from recent trends in
advertising practice, it presents a research agenda consisting of four main topics: (1) new media
and forms of advertising (e.g. product placement), (2) media synergies, (3) advertising
productivity and (4) advertising effects on performance stability. Copyright # 2005 John Wiley
& Sons, Ltd. This paper has two main objectives. The first is to discuss new research findings (of
the last ten years) in advertising response research, their implications for managers and their
importance for broadening the scope of advertising research. The second objective is to propose
an agenda consisting of four new areas of research: non-traditional media, media synergies,
advertising productivity and advertising’s role in performance stability. The choice of these four
issues was based on their practical relevance and the lack of sufficient academic research to
consider them resolved. The discussion of the proposed research agenda includes suggestions for
potential methodological approaches, data requirements and measurement. Given the focus of
the paper on advertising response models, the discussion mainly concerns empirical econometric
studies that use market-based performance measures (e.g. sales, share).

Marketing managers are under increasing pressure to justify marketing spending. The
issue of quantifying the returns to marketing activities in financial terms is one of the greatest
challenges facing marketing and brand managers today. For example, Rust and colleagues


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(2004, p. 76) note that marketers have not been held accountable for showing how marketing
adds to shareholder value and that “this lack of accountability has undermined marketers’
credibility, threatened the standing of the marketing function within the firm, and even
threatened marketing’s existence as a distinct capability within the firm.”
Brand-The initial framework, developed in the 1990s, was based on four pillars:
differentiation, relevance, esteem, and knowledge (Agres and Dubitsky 1996). Implications from
this model have helped shape thinking on various brand issues. For example, Aaker (1996,
Chap. 10) uses the BAV model as one of the key inputs into formulating his “brand equity ten”
and has continued to make use of the framework to highlight the crucial role of differentiation in
brand building (Aaker 2004, p. 136; Aaker and Joachimsthaler 2000, p. 263). Y&R recently
modified its framework and introduced a fifth pillar called “brand energy.” 1 The measure is
based on the Y&R survey questions reflecting the degree to which the brand is viewed as (1)
innovative and (2) dynamic.

The Pillars of the Initial Y&R BAV Model

Researchers have repeatedly established that the brand beliefs generated by an
advertisement affect consumer perception of the physical product during subsequent trial (e.g.,
Deighton and Schindler 1988; Kempf and Laczniak 2001; Kempf and Smith 1998; Marks and
Kamins 1988; Olson and Dover 1979; Smith 1993). However, those studies have typically
exposed consumers to the physical product shortly after exposing them to advertising. It is
therefore likely that in the marketplace a more extensive time lag occurs between both exposures
with beliefs decaying over time and that effects exist from perceived product physical attributes
on speciﬁc post experience brand beliefs in such cases (Kempf and Smith 1998).
Advertisement Effectiveness

The role of advertisement is to


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➢ Give your customer the reason to keep buying from you
➢ Attract Must -Have customers to try your products
➢ Increase the sales and profits
(Core customers are company’s most loyal customers who are willing to pay a fair
price for a product or service. Must-Have customers are people who could become
the core customers, but they currently do business with the competition.

Advertisement effectiveness can be checked a process call “Plus Over Normal”. To determine
the Plus over Normal results every ad is benchmarked against the normal business baseline. The
lift from the ad is sales can then be evaluated.

There are only three measures of advertising effectiveness:

➢ Did core customers increase their spending with the company after seeing my
advertising?
➢ Did any Must-Have customers start doing business with the company after seeing the
advertising?

➢ Did the ads generate a net profit?

The Effects of Advertising and Brand Value on Future Operating and Market
Performance

Li Li Eng and Hean Tat Keh

This paper examines the joint effects of advertising and brand value on the firm’s future
operating and market performance. We operationalize future operating and market performance
as future accounting returns and future stock returns, respectively. Our results show that both
advertising and brand value improve future accounting returns at the firm level. The impact of
advertising and brand value on future stock returns is minimal. We find that spending on
advertising results in better brand sales and brand profitability. Brand value is also a good


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predictor of brand performance. Thus, we conclude that advertising and brand value benefit the
brand and the firm through improved accounting performance. In this paper, we investigate the
impact of advertising and brand value on future operating and market performance. Key
intangible assets such as brand value (or brand equity), product differentiation, and goodwill are
the outcomes of investment in advertising. It is generally believed that advertising contributes to
the creation of brand value (Chaudhuri 2002; Chu and Keh 2006; Kimelman 1993; Sheinin and
Biehal 1999). Mizik and Jacobson (2003) argue that brand-based advertising can create a
comparative advantage for firms through its ability to differentiate the firm’s product. The brand
can be a formidable barrier to imitation, as brand equity is difficult for competitors to copy,
becoming an effective entry deterrence strategy. Industry observers and analysts note that many
companies continue to emphasize brand-building activities. For example, Samsung has been
rated by Interbrand, a brand-consulting firm, as the fastest-growing brand over the past few years
(“Yun Jong Yong” 2004). The CEO of Samsung, Yun Jong Yong, has been instrumental in
driving the creation of its brand value, claiming, “Our future will depend on our brand equity.”
While brand value creation is generally regarded as a “good thing,” we need to have
more concrete measures of brand value appropriation (i.e., extracting profits from brand value).
Merely knowing the effect of brand value on purchase intent (Cobb-Walgren, Ruble, and Donthu
1995) is inadequate; Chaudhuri (2002) proposes a stylized model of how brand reputation
affects the advertising–brand equity link. Using survey data, the models brand reputation as a
mediator on the effect of brand advertising, brand familiarity, and brand uniqueness on brand
equity outcomes. His results suggest that advertising directly or indirectly affects brand equity
measured as brand sales, market share, and relative price.

Second, firms spend large amounts annually on advertising and brand value creation with
the expectation of reaping returns in the future. As such, it is important to examine not only the
contemporaneous effect of advertising or brand value on firm performance, According to Low
and Mohr: “To be sure, advertising is vital to brand equity. However, advertising, per se, is not a


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