How does heterogeneity influence the effectiveness of marketing mix on brand sales?

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How does heterogeneity influence the

effectiveness of marketing mix on brand

sales?

By

Cheng Sun

University of Groningen

Faculty of Economics and Business

MSc Marketing Intelligence

June, 2017

S2925060 Email: c.sun.4@student.rug.nl Tel: 0648671599 9716 AE Groningen

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Abstract

This study investigates how brand heterogeneity and store heterogeneity moderate the effectiveness of the own brand’s price promotions and advertising, and the effect of competitors’ price promotions and advertising on the own brand’s sales in the convenience goods market. A dataset from AC Nielsen is employed in this study. The dataset contains 2912 observations, including data from 104 consecutive weekly sales and promotion activities for five brands of canned tuna in 28 supermarkets of the JEWEL chain. In this study, brand shares and store shares are applied to measure brand and store heterogeneity, respectively. The results reveal five major findings: 1) Competitors’ price promotions negatively interfere with the positive effect of the own brand’s price promotions on its sales. 2) Competitors’ advertising may produce positive spill-over effect, which strengthens the positive effect of the own brand’s advertising on its sales. 3) For a brand with a high brand share in the market, its brand share has a negative influence on the effectiveness of its price promotion, whereas it has a positive influence on the effectiveness of it its advertising. 4) A brand with a higher brand share in the market can better defend against competitors’ price promotions. 5) Store share does not significantly influence the effect of an own brand’s price promotions, advertising, competitors’ price promotion, and competitors’ advertising on the own brand’s sales.

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1. Introduction

Measuring the effectiveness of firms’ marketing expenditures on their marketing mix is a challenge faced by business managers. The effectiveness of marketing budget allocation and expenditures has been studied by many researchers, and it has been proven that market budget allocation and expenditures influence the business performance of firms (Ataman, Heerde and Mela, 2010; Heerde, Gijsenberg, Dekimpe, and Steenkamp, 2013). In addition, companies should take competition into account when determining their marketing efforts and marketing budget allocation. However, many companies still have limited knowledge about how competitors’ marketing efforts influence the effectiveness of their own marketing efforts, which might cause the failure of firms (Montgomery, Moore, and Urbany, 2005). When consumers visit retailers to shop (e.g. supermarkets), they often encounter various promotional activities, such as price promotions and feature and display advertising. Steenkamp, Nijs, Hanssens, and Dekimpe (2005) stated that 24% of sales units are generated with support of promotional activities. Two of the most frequently used forms of promotional activities are price promotions and advertising, both of which can influence the financial performance of retailers and brands (Erickson & Jacobson, 1992;

Blattberg, Briesch & Fox, 1995; Rennhoff & Serfes, 2009; Ataman et al., 2010).

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with consumers. For this reason, there could be an interaction effect between price promotions and advertising on brand sales. Moreover, while a brand engages in promotion activities, its competitors may also react to such activities. Steenkamp, Nijs, Hanssens and Dekimpe (2005) confirmed that competitors’ reactions influence the effectiveness of a firm’s own promotional activities. Furthermore, heterogeneity among stores and brands could influence the effectiveness of marketing activities (Steenkamp et al., 2005; Pauwels, 2004). Plenty of literature has indicated that including heterogeneity in sales models increases the fit of the models and prediction accuracy (e.g., Montgomery & Rossi, 1999; Andrews, Currim, Leeflang, & Lim, 2008). It is important to consider the differences among retailers and brands to measure the effectiveness of their employed marketing activities (Kamakura & Kang, 2007).

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There is limited research which has been conducted about the effectiveness of marketing activity interactions with a focus on heterogeneity. Therefore, this study aims to investigate how competitors’ marketing activities influence the effectiveness of a brand’s own marketing activities in the convenience goods market. It focuses on the two most important and commonly used promotional activities: price promotion and advertising. To expand upon the existing knowledge of the effectiveness of brands’ marketing efforts, store and brand heterogeneities are included in this study to investigate the moderating effect of heterogeneities on the effectiveness of a brand’s own price promotion and advertising. Furthermore, this research is also concerned with the moderating effect of the heterogeneities on the influence of competitors’ price promotions and advertising on the own firm’s brand sales. With those ideas in mind, the main research question in this study is as follows:

How does heterogeneity moderate the effect of an own brand’s price promotion, advertising, and competitors’ marketing reaction on the own brand’s sales?

The following sub-questions are hereby relevant to solve the research question:

• What is the effect of an own firm’s price promotion and advertising on brand sales?

• What is the moderating effect of a brand’s competitors’ price promotions and advertising on the effectiveness of the own brand’s marketing activities on brand sales?

• How do brand and store heterogeneities moderate the effect of the own brand’s price promotions and advertising on its sales?

• How do brand and store heterogeneities moderate the effect of competitors’ price promotions and advertising on the own brand’s sales?

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that an own brand’s market share influences the effect of its price promotion, advertising, and competitors’ price promotions, but not influences the effect of competitors’ advertising on brand’s sales. For a brand with a high share in the market, its brand share has a negative influence on the effectiveness of its price promotion, whereas its advertising positively influences this effectiveness. Likewise, a brand with a higher brand share in the market can better defend against competitors’ price promotions. However, store share has no significant influence on the effect of an own brand’s price promotions, advertising, competitors’ price promotions, and competitors’ advertising on the brand’s own sales. Besides this, competitors’ price promotions as a moderator was proven to negatively influence the positive effect of the own brand’s price promotions on that brand’s sales. Furthermore, competitors’ advertising might have a positive spill-over effect, which strengthens the positive effect of the own brand’s advertising on its sales.

The next chapter explains the existing knowledge from previous literature which concerns the effects on brand sales of price promotions, advertising, competitive reactions in the market, and brand and store heterogeneity. The constructed hypotheses and conceptual model are then presented. Afterwards, the methodology of this study is described. Subsequently, the results and discussion are provided, followed by the conclusion, implications, and limitations of this study.

2. Theoretical Framework

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its performance and the influence of competitors’ price promotions and advertising on the effectiveness of the brand’s price promotions and advertising. Moreover, the influence of brand and store heterogeneity on the effectiveness of the brand’s price promotions and advertising is also discussed.

2.1 Marketing Effectiveness

Based on Srinivasan, Vanhuele, and Pauwels (2010), marketing effectiveness can be tracked through marketing mix (price promotions, products, advertising, and distribution). Furthermore, marketing effectiveness is reflected by customer mind-set metrics such as brand awareness and brand attitudes, which contribute to sales. Previous literature has indicated that brand performance has generally been indicated by stock market returns, brand attitudes, and brand sales. With this in mind, brand sales are one of the most popular measurements of a brand’s performance (Ataman et al., 2010). When measuring the effectiveness of a brand’s marketing efforts, both the brand’s own marketing activities and competitive reactions should be considered (Pauwels, 2004).

2.2 Price Promotion

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negative influence on brand sales (Heerde et al., 2013; Ataman et al., 2010; Kuntner & Teichert, 2016).

2.3 Advertising

Brands invest in advertising for the purpose of increasing brand awareness and delivering price promotion information to consumers. The most frequently used advertising strategies are primarily designed for traditional media, such as mobile coupon ads and sophisticated location-based advertising, including billboard, posters, etc. (Esteves & Resende, 2016). Brand-oriented advertising can strengthen the brand images, enhance brand awareness, improve product differentiation, and effect brand equity (Ataman et al., 2010). In addition, post-launch advertising (for existing products) signals a perceived product quality, which also corresponds to brand sales (Kirmani, Amna & Wright, 1989; Song, Jang & Cai, 2016; Ataman et al., 2010).

2.4 Interaction of Price Promotion and Advertising

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Hypothesis 1a: The extent of a brand’s price promotion is positively related to its sales. Hypothesis 1b: A brand’s advertising is positively related to its sales.

Hypothesis 1c: As a brand advertises, the greater the extent of its price promotion, the stronger the effect on its sales.

2.5 Effect of Competitors’ Price Promotion and Advertising

While a brand implements price promotions and advertising, competitors also challenge the brand with their own price promotions and advertising (Lal & Villas-Boas, 1998). Consumers compare prices across different stores and brands. The emphasis on price comparison makes price elasticity stronger, while signalling brand and product performance makes price elasticity weaker (Fox & Hoch 2005; Kirmani & Wright, 1989; Warner & Barsky, 1995). In addition, with in-store advertising, retailers sometimes not only doing display and feature advertising for the products of one brand, but also doing display and feature advertising for competing brands. This affects the effectiveness of the brand’s advertising on its sales (Gu & Liu, 2013). Steenkamp et al. (2005) stated that competitors usually react towards promotional activities with the same instruments: price promotions are encountered with price promotions, and advertising is encountered with advertising. Therefore, it is interesting to investigate if competitors’ price promotions and advertising have a negative influence on the effectiveness of an own brand’s price promotion and advertising on brand sales.

Hypothesis 2a: The extent of competitor’s price promotion is negatively related to the own brand’s sales.

Hypothesis 2b: Competitors’ advertising is negatively related to the own brand’s sales. Hypothesis 2c: The higher the extent of the competitors’ price promotions is, the weaker the influence of the own brand’s price promotion on the own brand’s sales.

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2.6 Brand and Store Heterogeneity

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Moreover, promotion effects vary across brands (Hanssens et al., 2003; Brezger & Steiner, 2008) because all brands have different prices, positions, and shares in the market (Ailawadi et al., 2006). The effect of marketing activities of different brands is intended to be different. In addition, Ailawadi et al. (2006) stated that consumers tend to favour brands which have higher market shares and are more heavily advertised. The purchases of preferred brands are expected to increase when there is promotion activity. These preferred brands have higher shares and heavier advertising, which reveals more consumer pull and indicates that the power of the brands is stronger (Ailawadi et al., 2006). In addition, Steenkamp et al. (2005) also confirmed that the higher the brand’s share in the market, the more powerful the brand is over competitors. When preferred brands are promoted, consumers are expected to switch to these brands. In this way, the more powerful a brand is, the more the price promotions and advertising are expected to improve brand sales (Steenkamp et al., 2005). Ataman et al. (2010) presented the notion that advertising and price promotion are two drivers which are important for brand share. Accordingly, brand share is used as a measurement for brand heterogeneity in this study, hence brand share and store share are expected to strengthen the effect of the own brand’s price promotions and advertising.

Hypothesis 3a: Brand share is positively related to its sales.

Hypothesis 3b: The higher the brand share, the stronger the effect of the brand’s price promotion is on its sales.

Hypothesis 3c: The higher the brand share, the stronger the effect of a brand’s advertising is on its sales.

Hypothesis 3d: The higher the brand share, the more positive the effect of an own brand’s advertising is on the success of the brand’s price promotion.

Hypothesis 4a: Store share is positively related to brand sales in a store.

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Hypothesis 4c: The higher the store share, the stronger the effect of a brand’s advertising is on its sales in that store.

Hypothesis 4d: The higher the store share, the more positive the effect of the own brand’s advertising is on the success of its price promotion in that store.

Naik, Raman, and Winer (2005) found that the price promotions and advertising of each brand are influenced not only by the own brand’s share, but also by competitors’ shares in a competitive market. Steenkamp et al. (2005) suggested that if competing brands are more powerful, the retaliation effect of competing brands’ price promotions and advertising is more aggressive. In this way, the dominant competing brand’s price promotion and advertising may have a more negative influence on the own brand’s sales than subordinate competing brands. Furthermore, store share might influence the size of the negative effect of competitors’ price promotion and advertising on the own brand’s sales. In this study, brand share and store share are also investigated to determine if they strengthen the negative influence of competitors’ price promotions and advertising on the own brand’s sales.

Hypothesis 5a: A competitor’s brand share is negatively related to the own brand’s sales.

Hypothesis 5b: The stronger the competitor’s brand share is, the stronger the negative effect of competitors’ price promotion is on the own brand’s sales.

Hypothesis 5c: The stronger the competitor’s brand share is, the stronger the negative effect of competitors’ advertising is on the own brand’s sales.

Hypothesis 6a: The higher a store’s share is, the stronger the negative effect of competitors’ price promotion is on the own brand’s sales in that store.

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2.7 Conceptual Model

Figure 1 Conceptual Model

3. Methodology

This study investigates the moderating effect of brand share and store share on the effect of the own brand’s price promotions and advertising on its sales, the moderating effect of competitors’ price promotions and advertising on the effectiveness of the own brand’s price promotions and advertising; and the moderating effect of brand share and store share on the influence of competitors’ price promotion and advertising on the own brand’s sales. Therefore, brand sales are a dependent variable to measure the effectiveness of the own brand’s price promotion and advertising. Price promotion and advertising of all brands are independent variables. Furthermore, competitors’ price promotion, advertising, brand shares, and store shares are used as moderators in this study.

3.1 Data Description

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types of the specified brands and stores. It presents all commodity volumes of each stores as well. The description of variables in the dataset is listed in the following table (Appendix 1). The causal code in the dataset specifies the different types of feature and display advertising: non-advertising promotions; display advertising only; feature advertising, including major advertising only and coupon advertising only; feature and display advertising, meaning display and major advertising, and display and coupon advertising. Appendix 2 illustrates the description of weekly prices, sales, and revenues of all five brands of canned tuna across 28 supermarkets the JEWEL chain. Brand 3 and Brand 4 boasted almost the same price, and they had the highest prices among all five brands, followed by Brand 2, Brand 5, and Brand 1, in that order. In addition, Brand 2 and Brand 3 had the most average sales among these five brands, followed by Brand 5, Brand 4, and Brand 1, in that order. In addition, Brand 2 had the highest brand share (30.09%), with Brand 3 next at 27.46%, Brand 5 at 17.00%, Brand 4 with 16.20%, and finally Brand 1 with 9.25%. In this way, Brand 2 and Brand 3 were the dominant brands among these five. Brands 4 and 5 are the subordinate brands. Furthermore, Brand 1 was the weakest brand with least brand share. Moreover, Brand 3 had the highest revenues, followed by Brand 2, Brand 5, Brand 4, and Brand 1.

3.2 Variable Manipulation and Operationalization

In this section, the different measures of price promotion, advertising, brand shares, store shares, and competitive reactivity are discussed. In addition, the price promotions and advertising which the brands utilized in these 104 weeks are identified.

3.2.1 Price Promotion

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line charts below (Figure 1) present the weekly actual prices and regular prices of Brand 2 in Store 1 (the price line charts of Brands 1, 3, 4, and 5 in store refer to Appendix 3). All actual prices of all brands fluctuated, except the actual price line of Brand 1. Brand 2, Brand 3, and Brand 4 had the most fluid price promotions. Compared to Brands 2, 3, and 4, Brand 5 had fewer price promotions in these 104 weeks. In addition, Brand 1 only adjusted its price once in these 104 weeks. Starting from around week 70, Brands 2, 3, 4, and 5 adjusted their prices, therefore the regular prices fluctuated. However, around week 90, they adjusted their price to a lower level than it was before week 70.

Figure 2 Brand 2: Actual Price vs. Regular Price in Store 1

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3.2.2 Advertising

There are three types of advertising activities: feature advertising (F), display advertising (D), and feature and display advertising (F+D). Lodisch, Abraham, Livelsberger, Lubetkin, Richardson, and Stevens (1995) indicated that TV advertising influences not only the advertising period, but also the periods following. Advertising may have a carryover effect on brand sales. Moriarty (1983) confirmed the carryover effect of advertising for durable goods. However, Moriarty (1983) found that advertising has no significant carryover effect for low-priced and frequently purchased goods. Canned tuna is a low-priced and frequently purchased good. Therefore, this study focuses on the lead advertising at period t which could be reflected on the brand sales of the same time.

3.2.3 Brand Share

In the theoretical framework chapter, it was explained that brand share might influence the effectiveness of the own firm’s price promotions and advertising on brand sales. In addition, it might also influence the effect of competitors’ price promotions and advertising on the own brand’s sales. A brand has different brand shares across different stores, so simply using the average of brand share ignores the characteristics of the individual stores. Therefore, brand shares of all brands in different stores are calculated by dividing the sum of a brand’s sales in a store by the sum of the total sales of all brands in that store.

3.2.4 Store Market Share

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volume (ACV) data included in the dataset, which indicate retailers’ total annual sales. Therefore, the store market shares can be calculated by dividing an individual store’s ACV by the sum of ACV for all 28 stores.

3.2.5 Competition Reactivity

The competitors’ price promotion and advertising might influence the effectiveness of the own firm’s price promotion and advertising. While the own brand conducts price promotion and advertising, competitors may also enact the same type of price promotion or advertising. The competitors’ reactivity is reflected by their actual price and advertising. The average share of different brands in stores is used to test if competing brands which have a higher brand share could have a more negative influence on the own brand’s sales. The store shares could also be tested to determine if store share influences the magnitude of the positive effect of the own brand’s price promotion and advertising on its own brand sales, and if store share influences the magnitude of the negative effect of competitors’ price promotion and advertising on the own brand’s sales.

3.2.6 Brand Unit Sales

In this study, the effectiveness of the own brand’s price promotion and advertising are measured, including the moderating effect of competitors’ price promotion and advertising, brand shares, and store shares. The effectiveness of a brand’s price promotion and advertising could be measured by its brand sales, hence the main relationship is between the own brand’s price promotion, advertising, and sales. The weekly unit sales of each brand in each store is suitable for this study.

3.3 Analysis Plan

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moderating effect of brand shares and store shares on brand sales. The model in this study captures the interaction effects among the own brand’s actual price, advertising, competitors’ actual prices, competitors’ advertising, brand share, and store share. In addition, Njis et al. (2001) stated that the effect of price promotion reflected on brands only at the current period of time. Because canned tuna is a low-priced and frequently purchased product, the advertising effect also only reflects on the period when advertising takes place (Moriarty, 1983). This study focuses on the current effect of price promotion and advertising, therefore there is no variable with lead or lagged effect included in the model. In order to present the direct effects and interaction effects on brand sales in the hypotheses, an additive model is suitable for this study.

In addition, according to the average brand shares of these five brands (refer to 3.1), Brand 2 and Brand 3 are dominant brands which had similar brand shares. Moreover, Brand 4 and Brand 5 are subordinate brands with similar brand shares. Brand 1 had the lowest brand share with no price promotion and rarely advertised in these 104 weeks. The effect of Brand 1’s price promotion and advertising could not be tested, therefore, in order to test if the results were constant and reliable, Brand 2 and Brand 4 were chosen as the own brands, respectively, while choosing Brand 3 and Brand 5 as competitors for Brand 2, and choosing Brand 2 and Brand 5 as competitors for Brand 4. Multiple regression analysis was applied in this study. The main effects of the own brand’s actual price, advertising, competitors’ actual price, competitors’ advertising, and store share are included in the model.

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store in separate models. Multicollinearity issues are solved (all VIFs < 3, Appendix 4). Moreover, in order to avoid multicollinearity issues and test the effect of the own brand’s shares and competing brands’ shares, brand share variables were respectively included in the model with the own brand’s actual price, advertising, competitors’ actual price, competitors’ advertising, and store share. In addition, to make variables less skewed, meet the inferential hypothesis, and test the effect of changing actual price on price elasticities, the natural logarithms of variables were applied in the mathematic model. Furthermore, the normality of the model was tested. If there was a non-normality issue in residuals of the model, bootstrapping was used to re-evaluate the estimates. The mathematic model is as follows:

With own brand share in a store:

ln (𝑆_&'() = 𝛽_,+ 𝛽_.ln (𝑋_0&'() + 𝛽₁𝑋_234&'(+ 𝛽₅ln (𝑋_67&') + 𝛽₈ln (𝑋_77&) + 𝛽_9:8ln (𝑋_;0&9()

<

9=. + <9=.𝛽9:>𝑋;234&9(+ 𝜀 (1)

With competitor’s brand share in a store:

ln 𝑆&'( = 𝛽,+ 𝛽.ln 𝑋0&'( + 𝛽1𝑋234&'(+ 𝛽5ln 𝑋77& + <9=.𝛽9:5ln 𝑋;0&9( +

𝛽_9:8𝑋_;234&9( < 9=. + 𝑛𝑘=1𝛽_𝑘+5ln (𝑋𝑐𝑏𝑠𝑖𝑘)+ 𝜀 (2) S = Brand sales i = Store indicator (i = 1…n) j = Brand indicator (j = 1…n) t = Week indicator k = Competitor indicator (k = 1…n) 𝛽,= Intercept

𝛽...<= Coefficients for parameters

𝑋0= Own brand’s actual price

𝑋234= Advertising of own brand

𝑋67= Brand share of own brand

𝑋77= Store share of a store

𝑋;0= Competitors’ actual price

𝑋;234= Competitors’ Advertising

𝑋;67= Competitors’ brand share

𝜀= error term

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following formulas express 13 interaction effects: the moderating effect of the own brand’s advertising on the impact of its actual price on its sales (formula 3); the moderating effect of the own brand’s share on the influence of its actual price on its sales (formula 4); the moderating effect of the own brand’s share on the effectiveness of its advertising (formula 5); the moderating effect of store share on the effectiveness of the own brand’s actual price (formula 6); the moderating effect of store share on the effectiveness of the own brand’s advertising (formula 7); the moderating effect of competitors’ actual price on the influence of the own brand’s actual price on its sales (formula 8); the moderating effect of competitors’ advertising on the effect of the own brand’s advertising on sales (formula 9); the moderating effect of competitors’ brand shares on the effect of own brand’s actual price on its sales (formula 10); the moderating effect of competitors’ brand shares on the effectiveness of the own brand’s advertising (formula 11); the moderating effect of store share on the effect of competitors’ actual price on the own brand’s sales (formula 12); the moderating effect of store share of a store on the effect of competitors’ advertising on the own brand’s sales (formula 13).

ln (𝑆&'() = 𝛽,+ 𝛽.ln (𝑋0&'() + 𝛽1𝑋234&'(+ 𝛽5ln (𝑋0&'()𝑋234&'(+ 𝛽8ln (𝑋67&') +

𝛽>ln (𝑋77&) + 9=.< 𝛽9:>ln (𝑋;0&9()+ <9=.𝛽9:I𝑋;234&9(+ 𝜀 (3)

ln (𝑆&'() = 𝛽,+ 𝛽.ln (𝑋0&'() + 𝛽1𝑋234&'(+ 𝛽5ln (𝑋67&') + 𝛽8ln 𝑋0&'( ln (𝑋67&') +

𝛽_>ln (𝑋_77&) + < 𝛽_9:>ln (𝑋_;0&9()

9=. + <9=.𝛽9:I𝑋;234&9(+ 𝜀 (4)

ln (𝑆&'() = 𝛽,+ 𝛽.ln (𝑋0&'() + 𝛽1𝑋234&'(+ 𝛽5ln (𝑋67&') + 𝛽8𝑋234&'(ln (𝑋67&') +

𝛽_>ln (𝑋_77&) + < 𝛽_9:>𝑋_;0&9(

9=. + <9=.𝛽9:I𝑋;234&9(+ 𝜀 (5)

ln (𝑆_&'() = 𝛽_,+ 𝛽_.ln (𝑋_0&'() + 𝛽₁𝑋_234&'(+ 𝛽₅ln (𝑋_67&') + 𝛽₈ln (𝑋_77&) + 𝛽_>ln (𝑋_0&'(𝑋_77&) + 𝛽9:>ln (𝑋;0&9()

<

9=. + <9=.𝛽9:I𝑋;234&9(+ 𝜀 (6)

ln (𝑆_&'() = 𝛽_,+ 𝛽_.ln (𝑋_0&'() + 𝛽₁𝑋_234&'(+ 𝛽₅ln (𝑋_67&') +

𝛽8ln (𝑋77&)+𝛽>𝑋234&'(ln (𝑋77&) + <9=.𝛽9:>𝑋;0&9(+ <9=.𝛽9:I𝑋;234&9(+ 𝜀 (7)

ln (𝑆&'() = 𝛽,+ 𝛽.ln (𝑋0&'() + 𝛽1𝑋234&'(+ 𝛽5ln (𝑋67&') + 𝛽8ln (𝑋77&) + 𝛽>ln (𝑋;0&9() +

𝛽9:>𝑋;234&9( <

9=. + <9=.𝛽9:Iln 𝑋;0&9( ln (𝑋0&'() + 𝜀 (8)

ln (𝑆&'() = 𝛽,+ 𝛽.ln (𝑋0&'() + 𝛽1𝑋234&'(+ 𝛽5ln (𝑋67&') + 𝛽8ln (𝑋77&) +

𝛽 ln (𝑋 )

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ln (𝑆&'() = 𝛽,+ 𝛽.ln (𝑋0&'() + 𝛽1𝑋234&'(+ 𝛽5ln (𝑋77&) + <9=.𝛽9:5ln (𝑋;0&9()+

𝛽_9:8𝑋_;234&9(

<

9=. + <9=.𝛽9:>ln (𝑋;679) + <9=.𝛽9:Iln (𝑋;0&9()ln (𝑋;67&9) + 𝜀 (10)

ln (𝑆_&'() = 𝛽_,+ 𝛽_.ln (𝑋_0&'() + 𝛽₁𝑋_234&'(+ 𝛽₅ln (𝑋_77&) + < 𝛽_9:5ln (𝑋_;0&9()

9=. +

𝛽9:8𝑋;234&9( <

9=. + <9=.𝛽9:>ln 𝑋;679& + <9=.𝛽9:I𝑋;234&9(ln (𝑋;67&9) + 𝜀 (11)

ln (𝑆_&'() = 𝛽_,+ 𝛽_.ln (𝑋_0&'() + 𝛽₁𝑋_234&'(+ 𝛽₅ln (𝑋_67&') + 𝛽₈ln (𝑋_77&) + 𝛽_9:8ln 𝑋_;0&9(

<

9=. + <9=.𝛽9:>𝑋;234&9(+ <9=.𝛽9:Iln (𝑋;0&9()ln (𝑋77&) + 𝜀 (12)

ln 𝑆_&'( = 𝛽_,+ 𝛽_.ln 𝑋_0&'( + 𝛽₁𝑋_234&'(+ 𝛽₅ln 𝑋_67&' + 𝛽₈ln 𝑋_77& + 𝛽9:8ln (𝑋;0&9()

<

9=. + <9=.𝛽9:>𝑋;234&9(+ <9=.𝛽9:I𝑋;234&9(ln (𝑋77&) + 𝜀 (13)

S = Brand sales i = Store indicator (i = 1…n) j = Brand indicator (j = 1…n) t = Week indicator k = Competitor indicator (k = 1…n) 𝛽,= Intercept

𝛽...<= Coefficients for parameters

𝑋0=Own brand’s actual price

𝑋0'(𝑋234'(= Interaction of own brand’s actual price and advertising

𝑋77= Store share

𝑋0𝑋67= Interaction of own brand’s share and actual price

𝑋234𝑋67= Interaction of own brand’s share and advertising

𝑋0𝑋77= Interaction of store share and own brand’s actual price

𝑋234𝑋77= Interaction of store share and own brand’s advertising

𝑋;0= Competitor’s actual price

𝑋;234= Competitor’s Advertising

𝑋;0𝑋0= Interaction of competitors’ actual price and own brand’s actual price

𝑋;234𝑋234= Interaction of competitors’ advertising and own brand’s advertising

𝑋;67= Competitors’ brand share

𝑋;0𝑋;67= Interaction of competitors’ actual price and competitors’ brand share

𝑋;234𝑋;67= Interaction of competitors’ advertising and competitors’ brand share

𝑋;0𝑋77= Interaction of competitors’ actual price and store share of a store

𝑋;234𝑋77= Interaction of competitors’ advertising and store share of a store

𝜀= error term

Brand share of the own brand, as well as store share, might influence the interaction effect of the own brand’s price promotion and advertising. Therefore, the interaction effect of the own brand’s share, advertising, and actual price (formula 14) and the interaction effect of store share, the own brand’s advertising, the own brand’s actual price (formula 15) are tested. Including these three-way interactions, the mathematic formulas are as follows:

ln (𝑆&'() = 𝛽,+ 𝛽.ln (𝑋0&'() + 𝛽1𝑋234&'(+ 𝛽5ln (𝑋0&'()𝑋234&'(+ 𝛽8ln (𝑋67&') +

𝛽>ln (𝑋0&'()ln (𝑋67&') + 𝛽I𝑋234&'(ln (𝑋67&') + 𝛽Jln (𝑋0&'()𝑋234&'(ln (𝑋67&') + 𝛽Kln (𝑋77&) +

𝛽_9:K𝑋_;0&9(

<

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ln (𝑆_&'() = 𝛽_,+ 𝛽_.ln (𝑋_0&'() + 𝛽₁𝑋_234&'(+ 𝛽₅ln (𝑋_0&'()𝑋_234&'(+ 𝛽₈ln (𝑋_67&') + 𝛽_>ln (𝑋_77&) + 𝛽_Iln 𝑋_0&'( ln (𝑋_77&)+𝛽_J𝑋_234&'(ln (𝑋_77&) + 𝛽_Kln (𝑋_0&'()𝑋_234&'(ln (𝑋_77&) +

𝛽_9:Kln (𝑋_;0&9( < 9=. ) + <9=.𝛽9:L𝑋;234&9(+ 𝜀 (15) S = Brand sales i = Store indicator (i = 1…n) j = Brand indicator (j = 1…n) t = Week indicator k = Competitor indicator (k = 1…n) 𝛽,= Intercept

𝛽...<= Coefficients for parameters

𝑋0= Own brand’s actual price

𝑋0𝑋234= Interaction of own brand’s actual price and advertising

𝑋0𝑋67= Interaction of own brand’s share and own brand’s actual price

𝑋234𝑋67= Interaction of own brand’s share and own brand’s advertising

𝑋0𝑋234𝑋67= Interaction of own brand’sactual price, advertising, and brand share

𝑋77= Store share

𝑋0𝑋77= Interaction of store share and own brand’s actual price

𝑋234𝑋77= Interaction of store share and own brand’s advertising

𝑋0𝑋234𝑋77= Interaction of own brand’s actual price, advertising, and store share

𝑋;0= Competitors’ actual price

𝑋;234= Competitors’ Advertising

𝜀= error term

4. Results

4.1 Main Effect of Price Promotion, Advertising, Brand share, and Store share

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variables in this model. The results show that if there is a 1% increase of the own brand’s (Brand 2) actual price, its sales decrease by 3.48%. In this way, to decrease 1% of the own brand’s actual price means that the own brand’s sales increase by 3.48%. Therefore, the extent of the brand’s price promotion has a positive effect on its brand sales. If Brands 3 and 5 increase their actual prices by 1%, the own brand’s sales increase by 1.08% and 0.48%, respectively. Conversely, decreasing the actual price of Brands 3 and 5 by 1%, the own brand’s sales decrease by 1.08% and 0.48%, respectively. Therefore, the extent of competitors’ price promotion has a negative influence on a brand’s sales. All types of advertising of Brand 2 have a positive influence on its brand sales. When the own brand uses feature, display, and feature and display advertising, its sales increase by 60%, 75%, and 124%, respectively. However, not all types of competitors’ advertising had a significant influence on the own brand’s sales. Brand 3’s feature and display advertising had a positive influence on the own brand’s sales. When Brands 3 and 5 presented feature and feature and display advertising, the own brand’s sales increased by 18% and 15%, respectively. In addition, if the own brand’s share increased by 1%, its sales increased 1.03%; if the store share increased by 1%, the brand’s sales increased by 0.84%.

Table 1 Main Effects of own brand's and competitors' price promotions, advertising, store share, and own brand's share

Own brand: Brand 2

Competitors: Brand 3 and Brand 5

Own brand: Brand 4

Competitors: Brand 2 and Brand 5 β Std. Error Sig. β Std. Error Sig.

(Intercept) -0.31 0,25 0.55 0.19 **

Own brand’s actual price -3.48 0.07 *** -4.35 0.07 *** Competitor’s actual price (Brand 3/2) 1.08 0.08 *** 1.25 0.06 *** Competitor’s actual price (Brand 4/5) 0.48 0.10 *** 0.97 0.10 ***

Own: F 0.60 0.05 *** 0.57 0.05 *** Own: D 0.75 0.05 *** 0.94 0.04 *** Own: F+D 1.24 0.03 *** 1.29 0.04 *** Competitor’s: F (Brand 3/2) 0.09 0.05 0.17 0.05 *** Competitor’s: D (Brand 3/2) 0.05 0.06 -0.19 0.05 *** Competitor’s: F+D (Brand 3/2) 0.18 0.04 *** -0.07 0.03 * Competitor’s: F (Brand 5) -0.02 0.06 0.08 0.06 Competitor’s: D (Brand 5) 0.04 0.06 0.01 0.06 Competitor’s: F+D (Brand 5) 0.15 0.06 ** 0.16 0.05 ** Own brand share 1.03 0.07 *** 0.84 0.06 ***

Store share 0.84 0.04 *** 0.78 0.04 ***

Model fit Adjusted _{F(14,2889) = 765.1, P < 0.001}𝑅1 = 0.79 Adjusted _{F(14,2889) = 763.3, P < 0.001}𝑅1 = 0.79

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When Brand 4 is considered the own brand with Brand 2 and 5 as competitors, the regression analysis is significant (Adjusted R2 = 0.79, F(14, 2889) = 763.3, P < 0.001). The overall quality of the model is sufficient, and 79% of the variation in the sales can be explained by the variation of the chosen variables in this model. The own brand’s actual price had a negative influence on its sales. By increasing 1% of the brand’s actual price, its sales decrease by 4.35%. Therefore, price promotion has a positive influence on the own brand’s sales. In addition, all types of the own brand’s advertising had a positive influence on sales. If the brand places a feature, display, or feature and display advertising, its sales increase by 57%, 94%, and 129%, respectively. Furthermore, the competitors’ actual price has a positive influence on own brand’s sales. If competitor Brands 2 and 5 increased the actual price by 1%, own brand’s sales would increase 1.25% and 0.97%, respectively. Therefore, competitors’ (Brands 2 and 5) price promotion has a negative influence on the own brand’s (Brand 4) sales. However, not all types of competitors’ advertising influence on the own brand’s sales. If Brand 2 conducts feature advertising, display advertising, or feature and display advertising, the own brand’s sales increase by 17%, decrease by 19%, and decrease by 7%, respectively. If Brand 5 employs feature and display advertising, the own brand’s sales increase by 16%. Furthermore, the own brand’s brand share and store share have a positive influence on its sales. When the own brand’s share and store share increase by 1%, the own brand’s sales increase by 0.84% and 0.78%, respectively.

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Table 2 Effect of competitors' brand shares

Own brand: Brand 2

Competitors: Brand 3 and Brand 5 Own brand: Brand 4 Competitors: Brand 2 and Brand 5 β Std. Error Sig. β Std. Error Sig. Competitor’s Brand share (Brand 3/2) -0.66 0.08 *** -0.15 0.07 * Model fit Adjusted _{F(14,2889) = 721.7, P < 0.001}𝑅1 = 0.78 Adjusted _{F(14,2889) = 711.4, P < 0.001}𝑅1 = 0.77 Competitor’s Brand share (Brand 5) -0.15 0.05 ** 0.39 0.05 *** Model fit Adjusted _{F(14,2889) = 705, P < 0.001}𝑅1 = 0.77 Adjusted _{F(14,2889) = 728.6, P < 0.001}𝑅1 = 0.78

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

Table 3 shows that Hypotheses 1a, 1b, 2a, 3a, and 4a are supported, both when Brand 2 is the own brand with Brands 3 and 5 as competitors, and when Brand 4 is the own brand with Brands 2 and 5 as competitors. The own brand’s price promotion, advertising, brand share, and store share have a positive influence on the own brand’s sales. However, Hypothesis 2b is not supported because not every types of competitors’ advertising have a significant influence on the own brand’s sales. Besides, some types of competitors’ advertising are found to have a positive influence on the own brand sales. When Brand 2 acts as the own brand, the competitors’ (Brand 3 and 5) brand share has a negative influence on its sales (Hypothesis 5a is supported). When Brand 4 is the own brand, Brand 3’s brand share has a negative influence on its sales. However, in that situation, Brand 5’s brand share has a positive influence on the own brand’s sales (Hypothesis 5a is rejected).

Table 3 Hypothesis Acceptance (Main effects)

Own brand: Brand 2

Competitors: Brand 3 and Brand 5 Own brand: Brand 4 Competitors: Brand 2 and Brand 5

Hypothesis 1a True True

Hypothesis 1b True True

Hypothesis 2b False False

Hypothesis 4a True Ture

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4.2 Two-way Interaction effects

4.2.1 Interaction of own brand’s price promotion and advertising

When the interaction effect of the own brand’s actual price and advertising are included in the model, the main effects of the store share, own brand’s sales, own brand’s actual price, own brand’s advertising, competitors’ actual prices, and competitors’ advertising remain almost the same. As Table 4 shows, when Brand 2 is the own brand with Brands 3 and 5 as competitors, the regression analysis is significant (Adjusted R2 = 0.79, F (17,2886) = 635.2, p < 0.001). The interactions of the own brand’s actual price and feature advertising (β = 1.20, p < 0.001), its actual price and display advertising (β =

0.06, p < 0.001), and its actual price and feature and display advertising (β = 0.64, p < 0.001) have positive influences on the own brand’s sales.

It is also confirmed that there is a significant interaction effect in that the own brand’s actual price and advertising positively influences its sales when Brand 4 is the own brand with Brands 2 and 5 as competitors (Adjusted R2 = 0.79, F(17,2886) = 628.5, p < 0.001). The interactions of the own brand’s actual price and feature advertising (β =

0.54, p < 0.001), its actual price and display advertising (β = 0.04, p < 0.05), and its

actual price and feature and display advertising (β = 0.14, p < 0.001) have a positive

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Table 4 Interaction effect of own brand's advertising and own price promotion

Own brand: Brand 2

Competitors: Brands 3 and 5 Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig.

(Intercept) 4.71 0.01 *** 4.14 0.01 ***

Own actual price/regular price -3.56 0.07 *** -4.36 0.07 *** Competitor’s actual price (Brand 3/2) 1.10 0.08 *** 1.24 0.06 *** Competitor’s actual price (Brand 4/5) 0.48 0.10 *** 0.98 0.10 ***

Own: F 0.78 0.14 *** 0.66 0.09 *** Own: D 0.77 0.07 *** 0.94 0.05 *** Own: F+D 1.36 0.11 *** 1.31 0.10 *** Competitor’s: F (Brand 3/2) 0.10 0.04 0.17 0.05 ** Competitor’s: D (Brand 3/2) 0.05 0.06 -0.19 0.05 *** Competitor’s: F+D (Brand 3/2) 0.19 0.04 *** -0.07 0.03 * Competitor’s: F (Brand 5) -0.04 0.06 0.07 0.06 Competitor’s: D (Brand 5) 0.06 0.06 0.01 0.06 Competitor’s: F+D (Brand 5) 0.14 0.05 ** 0.15 0.05 ** Own brand share 1.03 0.07 *** 0.84 0.07 ***

Store share 0.84 0.04 *** 0.78 0.04 ***

Own: Actual price * F 1.20 0.33 *** 0.54 0.14 *** Own: Actual price * D 0.06 0.22 * 0.04 0.22 * Own: Actual price * F+D 0.64 0.22 ** 0.14 0.39 * Model fit Adjusted _{F(17,2886) = 635.2, P < 0.001}𝑅1 = 0.79 Adjusted _{F(17,2886) = 628.5, P < 0.001}𝑅1 = 0.79

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.2.2 Interaction of own brand’s price promotion and own brand’s share

Containing the interaction of the own brand’s actual price and share in the model, the main effects remain mostly the same. Table 5 presents the estimates of the interaction effect of the own brand’s share and actual price. The regression analysis is significant when Brand 2 is the own brand (Adjusted R2 = 0.79, F (15,2888) = 723.0, P < 0.001). There is a significant interaction effect of the own brand’s actual price and share on its sales (β = 1.57, p < 0.001). If the own brand’s share increases, the effect of its actual

price become less negative on its sales. The results also confirmed this when Brand 4 is the own brand, and the regression analysis is significant (Adjusted R2 = 0.79, F(15,2888) = 719.0, P < 0.001). Brand 4’s share lowers the negative effect of its actual price on its brand sales (β = 1.43, p < 0.001), hence the own brand’s share negatively

influences the effectiveness of its price promotion. Hypothesis 3b is thus rejected.

Table 5 Interaction effect of own brand's share and own brand's price promotion

Own brand: Brand 2 Competitors: Brands 3 and 5

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Own actual price *own brand share 1.57 0.29 *** 1.43 0.31 *** Model fit Adjusted _{F(15,2888) = 723.0, P < 0.001}𝑅1 = 0.79 Adjusted _{F(15,2888) = 719.0, P < 0.001}𝑅1 = 0.79

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4.2.3 Interaction of own brand’s advertising and own brand’s share

Involving the interaction of the own brand’s advertising and sales, the regression analyses are significant (Adjusted R2 = 0.79, F(17,2886) = 631.2, P < 0.001; Adjusted R2_{= 0.79, F(17,2886) = 628.9, P < 0.001). Table 6 demonstrates that the own brand’s} share positively influences the effectiveness of its display advertising (β = 0.96, p <

0.05) with Brand 2 as the own brand. However, when Brand 4 acts as the own brand, the brand share does not significant influence the effectiveness of any type of the own brand’s advertising on brand sales (p > 0.05). Therefore, the own brand’s share does not always have a significant power over the effectiveness of the own brand’s advertising. Hypothesis 3c is then rejected.

Table 6 Interaction effect of own brand's share and own brand's advertising

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Own: F advertising *brand share -0.12 0.29 -0.15 0.27

Own: D advertising *brand share 0.60 0.30 * -0.43 0.25 Own: F+D* brand share -0.26 0.19 -0.13 0.24

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.2.4 Interaction of own brand’s price promotion and store share

Considering the interaction of the own brand’s actual price and store share, the regression analyses are significant (Adjusted R2 _{= 0.79, F(15,2888) = 713.9, P < 0.001;} Adjusted R2 = 0.79, F(15,2888) = 713.7, P < 0.001). Table 7 shows that the store share of a store has no significant influence on the effectiveness of the own brand’s actual price on its sales, both when Brand 2 and Brand 4 are the own brand (β = 0.06, p > 0.05; β = 0.50, p > 0.05). Therefore, the store share does not influence the success of the own

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Table 7 Interaction of store share and own brand's price promotion Own brand: Brand 2

Competitors: Brands 3 and 5 Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig.

Own actual price *store share 0.06 0.20 0.50 0.23

Model fit Adjusted _{F(15,2888) = 713.9, P < 0.001}𝑅1 = 0.79 Adjusted _{F(15,2888) = 713.7, P < 0.001}𝑅1 = 0.79 Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.2.5 Interaction of own brand’s advertising and store share

Regarding the interaction of the own brand’s advertising and store share, the regression analyses are significant (Adjusted R2 = 0.79, F(17,2886) = 629.9, P < 0.001; Adjusted R2_{= 0.79, F(17,2886) = 628.1, P < 0.001). Table 8 shows that store share has no} significant influence on the effectiveness of all types of the own brand’s advertising on its sales both when Brand 2 and Brand 4 act as the own brand (p > 0.05). For this reason, Hypothesis 4c is rejected.

Table 8 Interaction of store share and own brand's advertising

β Std. Error Sig. β Std. Error Sig. Own F advertising *store share 0.01 0.20 0.14 0.20

Own D advertising *store share 0.21 0.17 0.02 0.16 Own F+D*store share 0.05 0.12 0.04 0.15

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.2.6 Interaction of own brand’s and competitors’ price promotion

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(Brands 3 and 5) price promotions extent increase, the positive effect of the own brand’s (Brand 2) price promotion is weaker on its sales. With Brand 4 as the own brand and Brands 2 and 5 as competitors, the same results are proven: as the competitors’ (Brands 2 and 5) actual price increase, the own brand’s actual price has more of a negative effect on its sales (β = -1.15, p < 0.01; β = -2.62, p < 0.01). Therefore, the competitors’ price

promotions weaken the effectiveness of the own brand’s price promotion on the own brand’s sales, meaning that hypothesis 2c is supported.

Table 9 Interaction of competitor's price promotion and own brand's price promotion

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Own actual price * Competitor’s actual price (Brand 3/2) -1.67 0.22 *** -1.15 0.37 *** Model fit Adjusted _{F(15,2888) = 731.4, P < 0.001}𝑅1 = 0.79 Adjusted _{F(15,2888) = 719.6, P < 0.001}𝑅1 = 0.79 Own actual price * Competitor’s actual price (Brand 5) -1.99 0.36 *** -2.62 0.41 *** Model fit Adjusted _{F(15,2888) = 723.3, P < 0.001}𝑅1 = 0.79 Adjusted _{F(15,2888) = 724.8, P < 0.001}𝑅1 = 0.79

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.2.7 Interaction of competitors’ advertising and own brand’s advertising

The regression analyses are significant with the addition of the interaction of the competitors’ advertising and own brand’s advertising (Adjusted R2 = 0.79, F(23,2880) = 469.3, P < 0.001; Adjusted R2 = 0.79, F(23,2880) = 468.7, P < 0.001; Adjusted R2 = 0.79, F(23,2880) = 467.1, P < 0.001; Adjusted R2 = 0.79, F(23,2880) = 471.4, P < 0.001). Table 10 illustrates that not every type of competitor’s advertising influences the effectiveness of the own brand’s advertising on its sales. When Brand 2 is the own brand, Brand 3’s feature advertising has a positive influence on the effectiveness of the own brand’s feature advertising (β = 0.79, p < 0.05). In addition, Brand 3’s feature and

display advertising shows the same result (β = 0.61, p < 0.05). Moreover, Brand 5’s

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When Brand 4 is the own brand, Brand 2’s feature advertising has a positive influence on the effectiveness of the own brand’s feature and display advertising (β = 0.43, p <

0.01), and Brand 5’s feature advertising has a negative influence on the effectiveness of the own brand’s feature advertising (β = -0.53, p < 0.05). In addition, Brand 5’s

display advertising positively influences the effectiveness of the own brand’s feature and display advertising (β = 0.55, p < 0.05). Furthermore, Brand 5’s feature and display

advertising has a negative influence on the effectiveness of the own brand’s display advertising on the own brand’s sales (β = -0.49, p < 0.01). Accordingly, not all types of

advertising from competitors has a significant influence on the effectiveness of the own brand’s advertising on its sales, and competitors’ advertising may have both a negative and positive influence on the effectiveness of the own brand’s advertising on its sales. For these reasons, Hypothesis 2d is rejected.

Table 10 Interaction effect of competitor's advertising and own brand's advertising

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Own F* Competitor’s F (Brand3/2) 0.79 0.33 * 0.15 0.26

Own D* Competitor’s F (Brand3/2) -0.58 0.33 0.07 0.19

Own F+D* Competitor’s F (Brand3/2) 0.10 0.12 0.43 0.13 *** Own F* Competitor’s D (Brand3/2) 0.16 0.22 0.02 0.26

Own D* Competitor’s D (Brand3/2) -0.13 0.19 -0.03 0.14 Own F+D* Competitor’s D (Brand3/2) -0.20 0.15 0.18 0.18 Own F* Competitor’s F+D (Brand3/2) 0.61 0.26 * -0.17 0.20 Own D* Competitor’s F+D (Brand3/2) 0.15 0.14 -0.09 0.12 Own F+D* Competitor’s F+D (Brand3/2) -0.19 0.10 -0.20 0.11

Model fit Adjusted _{F(23,2880) = 469.3, P < 0.001}𝑅1 = 0.79 Adjusted _{F(23,2888) = 467.1, P < 0.001}𝑅1 = 0.79 Own F* Competitor’s F (Brand5) 0.63 0.33 -0.53 0.20 ** Own D* Competitor’s F (Brand5) 0.16 0.29 0.17 0.21

Own F+D* Competitor’s F (Brand5) -0.11 0.16 -0.37 0.19 Own F* Competitor’s D (Brand5) -0.50 0.21 * 0.18 0.55 Own D* Competitor’s D (Brand5) -0.01 0.18 0.17 0.13

Own F+D* Competitor’s D (Brand5) 0.06 0.14 0.55 0.18 ** Own F* Competitor’s F+D (Brand5) 0.63 0.26 * 0.40 0.29

Own D* Competitor’s F+D (Brand5) 0.01 0.20 -0.02 0.16

Own F+D* Competitor’s F+D (Brand5) -0.19 0.13 -0.49 0.12 *** Model fit Adjusted _{F(23,2880) = 468.7, P < 0.001}𝑅1= 0.79 Adjusted _{F(23,2888) = 471.4,P < 0.001}𝑅1 = 0.79

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4.2.8 Interaction of competitors’ price promotion and brand shares

The regression analyses are significant when including the interaction of the competitors’ actual prices and brand shares (Adjusted R2 _{= 0.79, F(16,2887) = 679.1, P} < 0.001; Adjusted R2 = 0.80, F(16,2887) = 714.1, P < 0.001; Adjusted R2 = 0.79, F (16, 2887) = 670.8, P < 0.001; Adjusted R2 = 0.79, F(16,2887) = 682.6, P < 0.001). Table 11 demonstrates how Brand 3 and 5’s brand shares have no significant influence on the negative effect of their actual price on the own brand’s (Brand 2) sales (p > 0.05). When Brand 4 is the own brand, both Brand 2’s and Brand 5’s brand shares increased the positive effect of their actual prices on the own brand’s sales (β = 0.82, p < 0.01; β =

0.82, p < 0.05;). In this way, competing Brands 2 and 5’s brand shares strengthen the negative influence of their price promotion on the own brand’s (Brand 4) sales. In this case, when Brand 2 is the own brand and Brand 3 and 5 are competitors, Hypothesis 5b is rejected. However, when Brand 4 is the own brand with Brand 2 and 5 as competitors, Hypothesis 5b is supported.

Table 11 Interaction effect of Competitor's brand share and Competitor's price promotion

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Competitor’s actual price * Competitor’s brand share (Brand3/2) 0.64 0.41 0.82 0.30 ** Model fit Adjusted _{F(16,2887) = 679.1, P < 0.001}𝑅1 = 0.79 Adjusted _{F(16,2887) = 670.8, P < 0.001}𝑅1 = 0.79 Competitor’s actual price * Competitor’s brand share (Brand5) -0.79 0.41 0.93 0.43 * Model fit Adjusted _{F(16,2887) = 714.1, P < 0.001}𝑅1 = 0.80 Adjusted _{F(16,2887) = 682.6, P < 0.001}𝑅1 = 0.79

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.2.9 Interaction of competitors’ advertising and competitors’ brand shares

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effect of their advertising on the own brand’s sales, both when Brand 2 and Brand 4 act as the own brand (p > 0.05), therefore Hypothesis 5c is rejected.

Table 12 Interaction of competitor's advertising and competitor's brand share

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Competitor’s F* brand share (Brand3/2) -0.23 0.30 -0.01 0.29

Competitor’s F* brand share (Brand3/2) -0.27 0.39 -0.13 0.30 Competitor’s F* brand share (Brand3/2) 0.10 0.26 -0.13 0.19

Model fit Adjusted _{F(18,2885) = 602.9, P < 0.001}𝑅1 = 0.79 Adjusted _{F(18,2885) = 594.1,P < 0.001}𝑅1 = 0.79 Competitor’s F* brand share (Brand5) 0.12 0.24 0.12 0.24

Competitor’s F* brand share (Brand5) -0.28 0.29 -0.58 0.29 Competitor’s F* brand share (Brand5) -0.11 0.25 -0.51 0.26

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.2.10 Interaction of competitors’ price promotion and store share

The regression analyses are significant when considering the interaction of the competitors’ actual prices and store share in the model (Adjusted R2 _{= 0.79, F(15,2888)} = 714.1, P < 0.001; Adjusted R2 = 0.79, F(15,2888) =714.3, P < 0.001; Adjusted R2 = 0.79, F(15,2888) = 712.6, P < 0.001; Adjusted R2 = 0.79, F(15,2888) = 712.3, P < 0.001). Table 13 demonstrates that the store share of a store has no significant influence on the effect of the competitors’ price promotion on the own brand’s sales, both when Brand 2 and Brand 4 are the own brand (p > 0.05). For this reason, Hypothesis 6a is rejected.

Table 13 Interaction effect of competitor's price promotion and store share

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Competitor’s actual price * store share (Brand3/2) 0.20 0.23 0.22 0.19

Model fit Adjusted _{F(15,2888) = 714.1, P < 0.001}𝑅1 = 0.79 Adjusted _{F(15,2888) = 712.6, P < 0.001}𝑅1 = 0.79 Competitor’s actual price * store share (Brand5) 0.40 0.35 0.24 0.34

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4.2.11 Interaction of competitors’ advertising and store share

When involving the interaction of the competitors’ advertising and store share of a store in the model, the regression analyses are significant (Adjusted R2 _{= 0.79, F(17, 2886)} = 629.5, P < 0.001; Adjusted R2 = 0.79, F(17,2886) = 630.4, P < 0.001; Adjusted R2 = 0.79, F(17, 2886) = 628.2, P < 0.001; Adjusted R2 = 0.79, F(17,2886) = 628.2, P < 0.001). Table 14 presents that the store share of a store has no significant influence on the effect of the competitors’ advertising on the own brand’s sales (p > 0.05), thus Hypothesis 6b is rejected.

Table 14 Interaction effect of competitor's advertising and store share

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Competitor’s F* store share (Brand3/2) -0.04 0.17 0.15 0.19

Competitor’s D* store share (Brand3/2) -0.11 0.20 0.08 0.16 Competitor’s F+D* store share (Brand3/2) 0.02 0.14 -0.03 0.11

Model fit Adjusted _{F(17,2886) = 629.5, P < 0.001}𝑅1 = 0.79 Adjusted _{F(17,2886) = 628.2,P < 0.001}𝑅1 = 0.79 Competitor’s F* store share (Brand5) 0.24 0.22 0.18 0.22

Competitor’s D* store share (Brand5) -0.12 0.22 0.12 0.22 Competitor’s F+D* store share (Brand5) -0.28 0.21 0.02 0.21

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.3 Three-way Interactions

4.3.1 Interaction of own brand’s share, price promotion, and advertising

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Table 15 Interaction effect of own brand's share, own brand's price promotion and advertising

Own brand: Brand 2

Competitors: Brands 3 and 5 Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Own actual price *F advertising 1.31 0.33 *** 0.48 0.32 ** Own actual price *D advertising 0.03 0.26 * 0.01 0.22 * Own actual price *F+D advertising 0.70 0.23 ** 0.10 0.40 * Own actual price *brand share 1.87 0.33 *** 1.42 0.34 *** Own brand share*F advertising -0.47 0.46 -0.51 0.51

Own brand share*D advertising 0.98 0.44 ** -0.14 0.31 Own brand share*F+D advertising -0.11 0.40 0.61 0.72 Own actual price *F advertising *own brand share -4.09 1.80 -2.61 2.15 Own actual price *D advertising *own brand share 0.86 1.34 1.02 1.23 Own actual price *F+D advertising *own brand share -1.32 1.29 1.68 2.64

Note: Sig. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

4.3.2 Interaction of store share, own brand’s price promotion and advertising

Adding the three-way interaction effect of store share, the own brand’s actual price, and the own brand’s advertising to the model, the regression analyses are significant (Adjusted R2 = 0.79, F(24,2879) = 450.5, P < 0.001; Adjusted R2 = 0.79, F(24,2879) = 446.1, P < 0.001). The main effects and the effect of the two-way interactions maintain consistency. Table 16 shows that the store share of a store does not significantly influence the effect of advertising on the success of the own brand’s price promotion (p > 0.05), so Hypothesis 4d is rejected.

Table 16 Interaction effect of store share, own brand's price promotion and own brand's advertising

Own brand: Brand 4 Competitors: Brands 2 and 5 β Std. Error Sig. β Std. Error Sig. Own actual price *F advertising 1.23 0.32 ** 0.58 0.42 * Own actual price *D advertising 0.02 0.24 * 0.03 0.23 * Own actual price *F+D advertising 0.66 0.23 * 0.13 0.40 * Own actual price *store share 0.22 0.26 0.90 0.31

Own store share*F advertising 0.18 0.29 0.27 0.32 Own store share*D advertising 0.27 0.17 0.13 0.17 Own store share*F+D advertising -0.26 0.21 0.27 0.41 Own actual price *F advertising *store share 0.65 1.29 -0.52 1.64 Own actual price *D advertising *store share 1.32 0.97 -0.18 0.94 Own actual price *F+D advertising *store share -1.76 0.91 -0.25 1.64 Model fit Adjusted 𝑅1 = 0.79

F(24,2879) = 450.5, P < 0.001

Adjusted 𝑅1_{= 0.79}

F(24,2879) = 446.1, P < 0.001

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4.4 Acceptance of hypotheses

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as competitors, competitors’ brand share makes the negative influence of their price promotion stronger on the own brand’s sales (Hypothesis 5b is supported). Store share has no significant on the negative effects of competitors’ price promotions on the own brand’s sales (Hypothesis 6a is rejected). Additionally, both competitors’ brand shares and store shares have no significant influence on the effect of the competitors’ advertising on the own brand’s sales (Hypotheses 5c and 6b are rejected). Lastly, the interaction effect of the own brand’s brand share or store share, actual price, and advertising is not significant (Hypotheses 3d and 4d are rejected).

Table 17 Acceptance of hypotheses

Own brand: Brand 2

Own brand: Brand 4

Hypothesis 1b True True

Hypothesis 1c False False

Hypothesis 2c True True

Hypothesis 2d False False

Hypothesis 5a True False

Hypothesis 5b False True

Hypothesis 6a False False

5. Discussion

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an increase of brand sales in the short term (e.g. Kuntner and Teichert, 2016; Howell et al., 2016), and advertising effects the own brand sales (e.g. Kirmani et al., 1989; Song et al., 2016; Ataman et al., 2010). However, the results illustrate that the positive influence of the own brand’s price promotion on brand sales becomes weaker when the own brand places an advertisement. In this way, the own brand’s advertising might weaken the effectiveness of the own brand’s price promotion. Mitra and Lynch (1995) explained that advertising contributes to product differentiation and provides more product information to consumer, which weakens price elasticities, whereas price promotion strengthens price elasticities (Kuntner and Teichert, 2016; Howell, Lee and Allenby, 2016). Nijs et al. (2005) also stated that non-price advertising reduces the effects of price promotions, therefore placing non-price advertisements negatively influences the positive effect of price promotions on brand sales.

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promotions weaken the effectiveness of the own brand’s price promotion (Steenkamp et al., 2005).

Unsurprisingly, the results prove that there is a positive influence of the own brand’s share and store share on brand shares because store shares reflect the proportions of sales relative to all stores, which indicates attractiveness of the stores, shopping visits, etc. As store share of a store increases, the sales of all products in the store are expected to increase. In addition, brand share is reflected by the proportion of brand sales to the total sales of products in the same category. Therefore, when brand shares increase, brand sales are expected to increase as well. However, the own brand’s share is found to have a negative influence on the effectiveness of the own brand’s price promotion. Ailawadi et al. (2006) claimed that the purchasing of preferred brands is expected to increase sales when there is promotion activity. Increasing brand share means increasing popularity of the brand in the market; the brand become more preferred. Estelami and Maeyer (2004) indicated that product prices signal the level of perceived quality, which positively influences brand sales. Both Brand 2 and Brand 4 are high-priced products in the market (Appendix 2). Price promotion decreases the perceived quality of the products, which might decrease the popularity of the brand, thereby making the brand less preferred. Therefore, the increasing brand share makes price promotion less effective on brand sales. Moreover, the results present the notion that Brand 2’s share has a positive influence on the effectiveness of its display advertising. Ailawadi et al. (2006) stated that consumers more enjoy brands which have higher market shares and are more heavily advertised. Their study explained that Brand 2’s market share strengthens the effectiveness of its display advertising. However, Brand 4 has a much lower brand share than Brand 2, thus its brand share has no significant influence on the effectiveness of its advertising.

How does heterogeneity influence the effectiveness of marketing mix on brand sales?