The Effects of Publicity on Demand: The Case of Anti-Cholesterol Drugs

54 Pages Posted: 9 Mar 2011 Last revised: 17 Mar 2015

See all articles by Andrew T. Ching

Andrew T. Ching

Johns Hopkins University - Carey Business School

C. Robert Clark

HEC Montreal

Ignatius J. Horstmann

University of Toronto - Rotman School of Management; University of Toronto - Institute for Policy Analysis

Hyunwoo Lim

York University

Date Written: March 15, 2015

Abstract

Over the past ten years there has been increased recognition of the importance of publicity as a means of generating product awareness. Despite this, previous research has seldom investigated the impact of publicity on demand. We contribute to the literature by (i) proposing a new method for the interpretation of publicity data, one that maps the information in news articles (or broadcasts) to a multi-dimensional attribute space; (ii) investigating how different types of publicity affect demand; and (iii) investigating how different types of publicity interact with firms' own marketing communication efforts. We study these issues for statins. We find that publicity plays an important role both for expanding the market for statins and for determining which statins patients/physicians choose. We also find evidence that publicity can serve either as a substitute or complement for traditional marketing channels depending on the complexity of the information type. We argue that the interaction results are driven by the relative strengths of the corroborative and rational inattention functions in publicity. These results suggest that managers should be aware of the interactions between publicity and traditional marketing channels in order to better determine how to allocate their marketing expenditures.

Keywords: Publicity, Corroborative Evidence, Rational Inattention, Informative Detailing and Advertising, Demand, Prescription Drugs

JEL Classification: D12, I11, L65, M30, M31, M32

Suggested Citation

Ching, Andrew T. and Clark, C. Robert and Horstmann, Ignatius J. and Lim, Hyunwoo, The Effects of Publicity on Demand: The Case of Anti-Cholesterol Drugs (March 15, 2015). Forthcoming in Marketing Science; Rotman School of Management Working Paper No. 1782055. Available at SSRN: https://ssrn.com/abstract=1782055 or http://dx.doi.org/10.2139/ssrn.1782055

Andrew T. Ching (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

C. Robert Clark

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Ignatius J. Horstmann

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/ihorstmann

University of Toronto - Institute for Policy Analysis ( email )

140 St. George Street
Toronto, Ontario M5S 3G6
Canada

Hyunwoo Lim

York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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