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Related Experiment Videos

Ad spending: growing market share.

J C Schroer

    Harvard Business Review
    |December 10, 1989
    PubMed
    Summary
    This summary is machine-generated.

    To gain market share, advertising spending must at least double that of the leading competitor. Without this significant increase, increased advertising efforts may not be heard by consumers in competitive markets.

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    Area of Science:

    • Marketing and Advertising Strategy
    • Consumer Behavior Analysis
    • Market Dynamics

    Background:

    • Consumer goods markets often exist in a stable equilibrium with consistent advertising expenditures.
    • Small changes in market share are typical in established markets.
    • Understanding competitive advertising impact is crucial for market strategy.

    Purpose of the Study:

    • To elucidate the core principle of the relative share of voice effect in advertising.
    • To define the necessary advertising investment for market share gains.
    • To analyze the dynamics of competitive advertising in stable markets.

    Main Methods:

    • Conceptual analysis of market equilibrium and advertising expenditure.
    • Examination of the relationship between advertising spend and market share shifts.

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  • Case study analogy of competitive "yelling" to illustrate the effect.

    • Main Results:

    • Significant increases in advertising expenditure are required to influence market share.
    • A competitor must outspend the largest rival by a minimum of double to gain ground.
    • Relative share of voice is a critical determinant of consumer attention and market impact.

    Conclusions:

    • Achieving market share growth necessitates a substantial and sustained advertising investment.
    • The relative share of voice effect dictates that louder "voices" (higher ad spend) dominate.
    • Competitors must strategically out-invest to overcome market equilibrium and gain consumer attention.