Abstract

http://ssrn.com/abstract=472881
 
 

Footnotes (25)



 


 



The Informative versus Persuasive Role of Marketing Communication in New Product Categories: An Application to the Prescription Antihistamines Market


Sridhar Narayanan


Stanford Graduate School of Business

Puneet Manchanda


University of Michigan, Stephen M. Ross School of Business

Pradeep K. Chintagunta


University of Chicago

September 3, 2003


Abstract:     
Marketing communication plays a major role in influencing consumer purchases in new product categories. An important question about this communication is whether it plays an informative or a persuasive role over the life cycle of the new product category. We expect that consumers are not well informed about product quality in the early stages of the product life cycle but they become better informed over time. The informative role of marketing communication is likely to have a much larger effect with uninformed consumers than with consumers who are better informed. Therefore, we conjecture that marketing communication plays a predominantly informative role initially and a predominantly persuasive role later.

We develop a structural model of demand that allows for the differential impact of informative and persuasive roles of marketing communication over time. In addition, we control for the possibility that product experience also contributes to learning in such categories. We estimate our model on market-level data for the prescription antihistamines category. In our model, physician learning about new antihistamines occurs through marketing communication (detailing and meetings/seminars), and experience (past prescriptions). Specifically, our model is a random coefficients discrete choice model that allows for category expansion. The model also incorporates a Bayesian learning process through which physicians learn about the efficacy of this new class of drugs. We estimate our model using a GMM-based methodology.

We find that, on average, physicians are most sensitive to detailing relative to other promotional activities. However, more interestingly, we find evidence for both informative and persuasive effects of detailing on physicians' prescription behavior. In addition, we find that detailing plays a primarily informative role in the introductory phase (typically 6-14 months post introduction) but the persuasive role dominates later on. The finding that persuasive effects are significant may explain why firms continue to detail long after a drug is introduced. In terms of resource allocation for detailing over time, our results suggest that firms should follow a pattern of heavier detailing at the introduction phase followed by lower levels.

Number of Pages in PDF File: 47

Keywords: Marketing Communication, Detailing, Learning Models, Discrete Choice Models, Structural Models, Generalized Method of Moments, Pharmaceutical Industry, Antihistamines

JEL Classification: C35, D83, I11, M31, M37

working papers series


Download This Paper

Date posted: November 26, 2003  

Suggested Citation

Narayanan, Sridhar and Manchanda, Puneet and Chintagunta, Pradeep K., The Informative versus Persuasive Role of Marketing Communication in New Product Categories: An Application to the Prescription Antihistamines Market (September 3, 2003). Available at SSRN: http://ssrn.com/abstract=472881 or http://dx.doi.org/10.2139/ssrn.472881

Contact Information

Sridhar Narayanan (Contact Author)
Stanford Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States
650-723-9675 (Phone)
HOME PAGE: http://https://gsbapps.stanford.edu/facultybios/bio.asp?ID=409

Puneet Manchanda
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-936-2445 (Phone)
734-936-8716 (Fax)
Pradeep K. Chintagunta
University of Chicago ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-8015 (Phone)
773-702-0458 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 5,271
Downloads: 991
Download Rank: 11,230
Footnotes:  25

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.437 seconds