A Brand's Advertising and Promotion Allocation Strategy: The Role of the Manufacturer's Relationship with Distributors as Moderated by Relative Market Share

Abstract

Results of this study suggest that the type of exchange relationship between a packaged-goods manufacturer and its distributors influences a manufacturer's brand allocation between the frequently opposing strategies of advertising and promotion. As exchange relationships become more relational, manufacturers increase their allocation to advertising. Conversely, as relationships become more discrete, manufacturers increase their allocation to promotion. Additionally, study results suggest that a brand's relative market share moderates the influence of the exchange relationship type. Brands with low relative market share may experience greater opportunity for advertising in relational exchange and increased pressure for promotion in discrete exchange.