Social Media Marketing, Quality Signaling, and the Goldilocks Principle

Embraced by a rapidly increasing number of companies, social media marketing has become an integral part of companies' business strategies. However, not all the firms plan on a big spend on social media marketing. Our stylized model investigates the strategic effects of social media marketing spending (SMM spending) with the presence of exogenous quality revelation through sources over which firms have no direct control. Unlike traditional advertising, social media marketing has two roles: awareness enhancement and information revelation. Consumers are heterogeneous in their awareness of the product (e.g., whether they know the existence of the product). Our results suggest that the high-quality firm gets enough quality transparency from background user-generated discussions, and the cost of maintaining a social presence outweighs the benefits. The low-quality firm avoids social media marketing because quality transparency is broadly detrimental, whereas the mid-tier firm is “just right” to benefit from social media discussions they encourage. Our model provides a first step toward framing social media marketing spending as a strategic investment. We recognize that social media marketing, although capable of increasing consumer awareness and improving the realized perceptions of a firm's true quality, also has strategic signaling effects.

Evaluating the Effectiveness of Marketing Campaigns for Malls Using a Novel Interpretable Machine Learning Model

We develop a novel interpretable machine learning model, GANNM, and use newly available data to evaluate how different types of marketing campaigns and budget allocations influence malls’ customer traffic. We observe that the response curves that measure the impact of campaign budget on customer traffic differ for different categories of campaigns, with sales incentives or experience incentives, during peak periods, off-peak periods, or online promotion periods. Based on such accurate response curves from GANNM, the optimized budget allocation is estimated to yield a 11.2% increase in customer traffic compared with the original allocation. Our findings provide novel insights on managing mall campaigns. Mall managers should increase marketing spending to areas that were likely overlooked before and avoid over-crowding budget to campaigns during times with high levels of competition and are likely already over-marketed. We provide empirical evidence showing that the recent trend of employing novel approaches for enhancing customer experience in physical stores can effectively encourage customers to visit malls. Furthermore, we show that online promotions could also create opportunities for offline businesses—investing in campaigns in the major online promotion periods could significantly increase customer traffic for malls, given sufficient investment in the campaigns to raise customer awareness.

Leveraging Underdog Positioning and Consumer Trait Agreeableness for Sustained Marketing Strategy

Independent and small businesses often rely on underdog positioning strategies to gain market share against larger and more established companies. However, the effectiveness of these strategies remains unclear. The current study aims to investigate how different consumer personalities may influence their responses towards underdog positioning strategies. Two experimental studies with U.K. consumers (n = 349) show that the relationship between underdog status and positive attitudes is not as straightforward as previously believed. The research uses the lens of self-efficacy theory and found that underdog status positively correlates with perceived effort, consumer preference, and willingness to commit only among consumers with high trait agreeableness. In other words, although consumers generally acknowledge the efforts exerted by underdog providers, our study found that only agreeable consumers are more likely to reciprocate these efforts with increased positive attitudes. These findings contribute to the growing literature that examines the efficacy of the underdog effect. Subsequently, the findings have strong implications in ensuring the sustainability of small businesses by ensuring that marketing spending is optimized to target only the most effective consumer segments.

Exponential Organizations Hypergrowth Strategies and Firm Performance: The Moderating Role of Firm Size and Marketing Spending

With the increasing concerns of hypergrowth in order to compete in the international markets and survive, this study aids all firms in various industries, entrepreneurs and decision makers and draw their attention to business models and hypergrowth strategies that are applied by the fast-growing firms in the world. This study investigates the impact of hypergrowth strategy- leveraging assets that developed by Salim, (2014) and firm performance in exponential organizations; The sample size tested constituted of (34) exponential organizations form the fortune 500 and multiple regressions via Stata version 15 was applied for the time period of (2016-2019). Preliminary analysis was conducted to check the assumptions related to the regression models which include unit root, autocorrelation, residuals normality and heteroskedasticity issues. The results showed significant positive relationships between Growth in Fixed Assets (leveraging Assets strategy) and firm performance measured by ROA and ROE whereas, the moderating role of marketing spending and firm size showed insignificant impact in the relationship.

Exponential Organizations Hypergrowth Strategies And Firm Performance: The Moderating Role of Firm Size And Marketing Spending

With the increasing concerns of hypergrowth in order to compete in the international markets and survive, this study aids all firms in various industries, entrepreneurs and decision makers and draw their attention to business models and hypergrowth strategies that are applied by the fast-growing firms in the world. This study investigates the impact of hypergrowth strategy- leveraging assets that developed by Salim, (2014) and firm performance in exponential organizations; The sample size tested constituted of (34) exponential organizations form the fortune 500 and multiple regressions via Stata version 15 was applied for the time period of (2016-2019). Preliminary analysis was conducted to check the assumptions related to the regression models which include unit root, autocorrelation, residuals normality and heteroskedasticity issues. The results showed significant positive relationships between Growth in Fixed Assets (leveraging Assets strategy) and firm performance measured by ROA and ROE whereas, the moderating role of marketing spending and firm size showed insignificant impact in the relationship.

Métodos de medición y planeación publicitaria: usos de las comunicaciones integradas de marketing (CIM)

Given that one of the central elements in marketing spending is advertising, this study aims at analysing how the advertising planning process is influenced by the types of responses expected from the audience, the measurement methods used to assess advertising effectiveness and the expected results. This study was empirical and exploratory based on the application of a cross-sectional survey to 150 marketing managers of medium and large-sized companies in Colombia. The results show if organisations measure the level of compliance with the goals established in terms of IMC, they will make better decisions and allocate marketing budgets consistent with their objectives, resources and capabilities. As the results of the present study indicate, organisations can experience weaknesses in implementing measurement methods that guarantee the proper calculation of organisational results concerning advertising investment.

With Power Comes Responsibility: How Powerful Marketing Departments Can Help Prevent Myopic Management

Firms sometimes engage in myopic management (e.g., cutting marketing spending, providing lenient credit to customers to improve short-term results). Although marketing is at the center of such myopic management, there are few insights on whether a marketing department could prevent it. To address this gap, the authors examine the role of powerful marketing departments in preventing myopic marketing spending and revenue management. They hypothesize that there are internal and external enablers of marketing department power (i.e., a chief executive officer with marketing experience, the firm’s power over its customers, analyst coverage, and institutional stock ownership) that help a powerful marketing department prevent myopic management. They test the hypotheses using a panel of 781 publicly listed U.S. firms between 2000 and 2015. As hypothesized, when the firm has (1) a chief executive officer with a marketing background and (2) power over its customers, increasing marketing department power decreases the likelihood of both myopic marketing spending and myopic revenue management; increasing marketing department power and analyst coverage decreases the likelihood of myopic marketing spending. The findings highlight powerful marketing leadership as a hitherto overlooked way to prevent myopic management and improve firm performance.

Marketing Spending and Brand Performance Volatility

If company revenues fluctuate, the resulting volatility makes it more difficult to project the company’s future revenues and earnings and ensure steady cash-flow. This lessens investor confidence and, as such, can harm the financial health of a brand. So, effective marketing can have undesired financial side effects. The optimal marketing behaviors derived with and without volatility calculations will be quite different. Analytically savvy companies will be able to gain competitive advantage from this realization.

Marketing spending and aftermarket performance of IPO firms

Purpose Increasingly, marketing managers are asked to consider the financial implications, in terms of both book and market values, when making strategic decisions. The purpose of this paper is to investigate the role of marketing expenditures in explaining the variation in the aftermarket performance of a sample of firms conducting initial public offerings (IPOs). Design/methodology/approach Theories from marketing and finance – market-based assets (MBA) theory and signaling theory respectively – serve as the conceptual basis of this paper. The results of this study, based on a sample of 2,103 IPOs covering the 1996 to 2008 time period, suggest that increased marketing spending positively impacts aftermarket (i.e. stock price) performance. Findings The authors find that while short-run aftermarket performance is positively and significantly impacted by pre-IPO marketing spending, long-run firm performance measures do not appear to be impacted by pre-IPO marketing spending. Further, pre-IPO marketing spending does not incrementally reduce underpricing or improve long-run performance when the IPO takes place during extreme market conditions such as recessions or hot markets, and these results are important to the shareholders and potential investors in the firm. Research limitations/implications Theoretically this paper advances the literature on the marketing-finance interface by extending the MBA and signaling theories. For practice, the results indicate that spending more money on marketing before the IPO and disclosing this information produces positive bottom-line results for the firm. Originality/value While Luo (2008) documents a significant relationship between the firms’ pre-IPO marketing spending and IPO underpricing, few studies explore the impact of marketing spending on stock price performance beyond the first day of trading. This paper makes three unique contributions. First, the authors extend Luo’s study by investigating the effect of marketing expenditures on underpricing during extreme market conditions. Second, the authors are the first to examine IPO performance in the long-run as well as the short-run. Finally, the authors assess how long-run performance is impacted by marketing spending during extreme market conditions. The findings of this study has implications for managers and shareholders of firms considering going public through a traditional IPO.