An Empirical Comparison between Societal Expenditure and Marketing Expenditure on Bank’s Performance

Abstract

Marketing expenditure plays a crucial role in determining performance since promotion mix generates market shares and revenues for the brands. But, nowadays, the impact of promotional expenditure is appeared to be non-responsive to influence the revenue and profitability as the consumers are now having ample scopes of escaping advertisement. Moreover consumers prefer the products that are associated with some social cause. Hence the purpose of this paper is to compare the impact of societal and marketing expenditure on profitability. To attain the purpose, we have employed empirical results of various Indian banks by developing a model using profit after tax (PAT), societal and marketing expenses. In particular, we have considered log-linear model as it fits better for all the banks when compared with the linear model. Further, we have compared the profit elasticity between societal and marketing expenses. Finally, association between the profit performance status and the comparative profit contribution at equal expenditure has been tested by employing non-parametric χ² test and Cramer’s V. Result proves the efficiency of ‘expenditure in social concern’ compared to ‘Expenditure in traditional marketing tools’ and hence it suggests for adopting alternative route, that is, societal means of promotion for better customer connect.