Abstract
Branded advertising, a foundation of brand-building efforts, seek to persuade consumers to select a specific brand over a competitor brand. The objective of this study was to examine the effectiveness of branded advertising in the alcoholic beverage industry of South Africa, particularly with regard to the relationship between alcohol advertising, price effects and alcohol consumption (brand and segment). A causal research design was used, which included secondary data analysis (SDA) and quantitative time series data analysis spanning a 32 months period. Variables included brand advertising expenditure; -sales volume; -market share; -retail selling price (RSP); and segment volume. Tests for stationarity, co-integration and regression were applied to assess associations between constructs. The findings indicate that branded alcohol advertising had little or no effect on brand- and segment consumption, or brand market share whereas price effects were significant. Limitations include the scope of the time series of data and the exclusion of below-the-line advertising expenditure. Notwithstanding, this paper provides evidence to support the imperative of the integrated marketing mix and optimal combination of marketing mix elements.
Highlights
C ompanies spend millions of dollars annually on advertising in an effort to differentiate their brands and to persuade consumers to choose their brands over that of their competitors
The percentage variation in brand volumes, segment volumes and brand market share explained by branded advertising was non-significant, partially contradicting the findings of Parry, Burnhams and London (2012); Anderson, de Bruijn, Angus, Gordaon and Hastings (2009) as well as Snyder, Milici, Slater, Sun and Strizhakova (2006) who argued that evidence suggests that alcohol advertising does influence brand choice and young people’s behaviour and increased consumption
The retail selling price (RSP) of alcoholic beverages had a significant effect on consumption and explained between 47.8% and 55.8% of the variation in brand volumes, which supports the findings of Gius (1996), who stated that advertising may increase price competition, which makes alcohol beverages more affordable to consumers and increases their propensity to consume
Summary
C ompanies spend millions of dollars annually on advertising in an effort to differentiate their brands and to persuade consumers to choose their brands over that of their competitors. According to the latest AdDynamix (Advertising expenditure) data an estimated $165 million was spent on liquor advertising in 2011 alone) (AdDynamix, 2011). Companies that operate in the alcoholic beverage market must determine whether their expenditure on advertising is justified and if it contributes toward their own brands consumption, market share gains, and the ability to differentiate, or contribute to the total segment consumption levels
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