2. Antti Vassinen
• M.Sc. in Industrial Engineering (HUT) + IDBM
• Marketing lecturing (HSE, HUT) since 2004
• Marketing research and coordinating StratMark at HSE
since 2005
• Managerial/executive education and consulting
• Dissertation (soon) on using fuzzy logic to analyze
complex causes behind marketing outcomes
• Other interests in information and interaction design,
European history and house music
Antti Vassinen 2010–11–09
2010–11–16 antti.vassinen@aalto.fi
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3. Agenda this week: topics
• Advertising and consumer psychology
– The mechanics for causing change in behavior
• Quantitative advertising research
– Quantifying the effects
• Practical applications
Antti Vassinen
2010–11–16
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4. Agenda this week: Tuesday
• Understanding marketing performance
– Models and frameworks
• Effects of advertising
– Hierarchies, cognition, affect & experience
– Response models
• Current challenges and future directions
– Consequences of technology on STP and effective marketing
• Targeting online advertising based on media content and
individual interests
– Visiting lecture by Dr. Petrus Pennanen (CEO), Leiki Oy
Antti Vassinen
2010–11–16
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5. Agenda this week: Thursday
• Connecting advertising spend with results: industry
practices and problems
– Visiting lecture by Klaus Kuhanen (CEO) and Anna Vähäsalo
(Research Manager), JCDecaux Finland Oy
• Valkee case study presentations
Antti Vassinen
2010–11–16
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6. Model-building
• Types of model
– Normative
– Descriptive
– Predictive
• Consumer durbles & sales force optimization
• Approximations of reality
– Hard to find
– Difficult to parametrisize
– Inaccessible to managers
– Incomplete
Antti Vassinen
2010–11–16
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7. Models of advertising effects
Market response (–) No intermediate advertising
(Sales response) effects considered
Cognitive information C “Think”
Pure affect A “Feel”
Persuasive hierarchy CA “Think” » “Feel” » “Do”
Low-involvement hierarchy CEA “Think” » “Do” » “Feel”
Integrative (C)(A)(E) Hierarchy not fixed, depends on
product, involvement
Hierarchy-free NH No particular hierarchy of
effects of proposed
(Vakratsas & Amber 1999)
Antti Vassinen
2010–11–16
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8. EAC space
1. Experience
– …of product, brand, product category, sales channel,
experimentation, meeting affect
2. Affect
– Utilitarian and hedonic attitudes
– Toward ad, product, brand…
– Product positioning
3. Cognition
– Product differentiation
+ Self-expression in all three
Antti Vassinen
2010–11–16
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9. Generalizations from advertising
research (Vakratsas & Amber 1999)
1. Experience, affect and cognition are the three key
intermediate effects
2. Short-term advertising elasticities are small and
decrease during the PLC
3. In mature, frequently purchased packged goods
markets, returns to advertising diminish fast (1-3
reminders per cycle enough)
4. The concept of a space of intermediate effects is
supported but a hierarchy is not
5. Cognitive bias interferes with affect measurement
Antti Vassinen
2010–11–16
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10. Advertising context
• Research needs from Vakratsas & Ambler (1999)
– Goal diversity vs. effect diversity
– Product category effects on models
– Interaction with competition
– Wider scope of marketing actions (marketing mix)
– PLC stage
– Customer heterogeneity
• Effects of actions on
– Market structure & institutions
– Competitors
– Intangible assets
• Complex, nonlinear interactions & synergies
• Diverse & evolving markets
Antti Vassinen
2010–11–16
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11. Linking activities with financial results
Marketing Intermediate Financial
action outcome results
Brand Price
TV ads
preference premium
(Stewart 2009)
Antti Vassinen
2010–11–16
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13. Cash flow =
The ultimate marketing metric
1. Growth rate
– Sell more of old stuff to existing customers
– Sell new stuff to existing customers
– Get new customers
2. Operating profit margin
– Decrease costs
– Increase prices
3. Working capital Affecting these
– Fixed and variable must also be the
– Cost of capital purpose of any
– Role of assets (=leverage) advertising!
4. Decrease volatility
– Even out cash flows for reduced risk
Antti Vassinen
2010–11–16
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14. Return on marketing investment
Short-term
Long-term Real
(incremental)
(persistent) options
effects
effects -
-
- Future
Incremental
Brand equity opportunities
sales
Candidate for Candidate for Idiosyncratic
shared stadard shared stadard to firm
Antti Vassinen
2010–11–16
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15. Effects of advertising
1. Short-term effects (= incremental, current)
– Small & fragile for advertising cf. other marketing mix components
2. Long-term effects (= persistent, carryover)
– Complex to model
3. Shape effects
– Advertising elasticity & operating context
4. Competitive effects
– Relative measures useful
5. Dynamic effects
– Wearin, wearout, hysteresis
6. Content effects
– #1 source of variation; role of creativity; consumer experiments
7. Media effects
Antti Vassinen
2010–11–16
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16. Temporal effects of advertising
(A) Current effect (B) Carryover effects
of long duration
X X X X X
(C) Carryover effects (D) Persistent effect
of short duration
X X X X X
Antti Vassinen
2010–11–16
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17. Linear & nonlinear responses
Sales Concave
p ed
S-sha
Advertising
Antti Vassinen
2010–11–16
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18. Wearin & wearout effects
(pulsing schedule)
Advertising wearin
Sales
Advertising wearout
Base sales
X X X X X X
Time
Advertising eXposures
Antti Vassinen
2010–11–16
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20. Technological transformation
• Web 2.0 -> semantic web
• New exchange systems
• Tracking behavior and preferences online
– Visibly and less visibly
• AI recommender systems
– Expert systems
• Preference ontologies for information discovery
– Expert
– Social
– Full AI
• Implications for STP?
Antti Vassinen
2010–11–16
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