This research develops hypotheses to explain temporal changes in the effectiveness of marketing
mix variables. Three potential explanations for these changes in market response are
explored: (1) changes in market response associated with industry evolution, (2) trends in
market response which may be related to changes in consumer knowledge and familiarity
with products over time, and (3) changes in market response associated with changes in
consumer incomes. In addition, this research investigates (4) changes in the relative effectiveness
of marketing mix variables over time. The hypotheses are tested on time series data
from five U.S. industries as well as aggregate U.S. consumption data. To estimate temporal
changes in market price sensitivity, advertising effectiveness, and distribution effectiveness,
a structural time series modeling methodology is used, and numerical optimization procedures
are used to perform maximum likelihood estimation.
The results show mixed support for the hypothesis that market response is related to the level
of industry matu~ity. Problems with the indicators of industry maturity were identified which
may be partly responsible for the mixed results. Consistent with expectations, this study
shows that advertising effectiveness does appear to decline over time, while market price
sensitivity and distribution effectiveness increase. Consequently, price reduCtions and increases
in distribution coverage appear to become relatively more effective than increases in
advertising expenditures over time. There appears to be no relationship between marketing
mix effectiveness and consumer incomes.
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