TTO_Grant Catalogue Grant Catalogue | Page 17

Long-Term Marketing Effectiveness in Turkey: Does It Differ from that in the US and Western Europe? Prof. Dr. Koen Pauwels DEPARTMENT Economics and Administrative Sciences CONTACT [email protected] FUNDING SCHEME TÜBİTAK 1001 START DATE 01.01.2010 DURATION 18 months 2010 National Grants Throughout economic booms and recessions, Turkish companies aim to sustain and grow their market performance. Marketing actions such as product innovations, price changes, distribution channels and communication activities all have the potential to deliver this performance. Unfortunately, very few companies know how much additional sales or profits are generated by a specific marketing actions – but those that do outperform their competitors in terms of revenue growth, market share and profitability (CMO Council 2004). In the United States and Western Europe, long-term marketing effectiveness has been quantified for a wide range of marketing actions and industry sectors. In Turkish marketing literature, authors have considered manager and consumer perception of sales promotion (Akyüz and Ayyıldız 2008, Tığlı and Pirtini 2003 ), advertising (Gülçubuk 2007), mobile marketing (Akbiyik, Okutan, Altunisik 2008) and packaging (Sütütemiz, Çiftyıldız and Konuk 2008). These studies survey consumers and/or managers on which marketing actions are perceived to be more versus less effective. Unfortunately, these stop short of quantifying the actual effectiveness of marketing actions with market data. It is well documented that consumers often change their purchasing behavior in response to marketing actions, even though they do not express this in a survey. In sum, companies doing business in Turkey currently lack hard numbers for long-term marketing effectiveness, which is crucial to making intelligent decisions on where to cut spending and where to increase it. This project aims to quantify long-term marketing effectiveness in Turkey and compare it with the marketing effectiveness observed in previous studies on US and Western European companies. The original value of the project consists of identifying and interpreting differences in long-term marketing effectiveness for an important emerging market versus mature markets. Differences are expected when compared to current research in mature markets. In the US, return on marketing investment is highest for new product introductions, then for pricing and promotions, next for pricing actions, then for distribution actions, and finally for communication (Pauwels 2004). In contrast, the researcher expects that communication and distribution effects dominate in Turkey, based on conversations and preliminary data analysis with Sony Eurasia. Moreover, communication effects are expected to far exceed the 0.05 elasticities typically reported in mature markets. Most importantly, the researcher expects to find several cases of permanent marketing effects, leading to long-term competitive advantage for the company studied. These findings will require the development of new frameworks and recommendations for Turkish businesses and policy makers that operate in emerging markets. Besides the important practical value to Turkish business, knowledge of long-term marketing effectiveness may also provide input to Turkish long-term economic development plans and European Union development projects. The scientific approach involves the persistence modeling framework introduced by Dekimpe and Hanssens (1999) and further refined by Pauwels (2004) and Pauwels and Hanssens (2007). This approach follows 3 steps: unit roots tests reveal the sustainable versus temporary advantage nature of marketing actions, vector auto-regressive models allow for short-term and long-term marketing effects, for competitive effects and for complex feedback loops, while i