Demand factor Corporate advertising
Corporate advertising effects on market very long period of time, but does not effect on sales immediately. Also, corporate advertising has a strong cumulative effect, so the strategy of investments should be planned for all 5 periods. Effect on sales is different for each market. The greatest effect will be in the Internet. EU and Nafta have the same effect, but is less than in the Internet.
It is important to remember that the effect of your investment comes after the period. If you spent 99 on corporate advertising in the Internet in 1 period, effect on sales you will get only in 2 period. That is why spending money on corporate advertising in the 5 period does not make sense, it would not effect on market at all.
Test 1 - EU and Nafta (2 period)
Vertical - the relative market change compared with 1 period. Horizontally - the absolute value of corporate advertising. Results for EU and Nafta, reference points are the same, therefore the effect on sales are equal for both markets.
Test 1 - Internet (2 period)
The same results, but for the Internet market. Line has a greater slope, because the effect is stronger than in the EU and Nafta. The coefficient is 0.0018 against 0.0015 (or 0.0014). Coefficient means that every $1 000, invested in corporate advertising will make 1 * 0.0018 = 0.18% market increasing. $99 000 will make 99 * 0.0018 = 17.82% market increasing.
Test 2 - EU and Nafta (3 period)
We continue to test corporate advertising in 3 period.
Test 3 - EU and Nafta (4 period)
We continue to test corporate advertising in 4 period.
Corporate advertising has a strong cumulative effect, which is equal to 60% of previous investments. For perfect estimate, we made test with two teams in the same group, where all 5 periods corporate advertising was 50 and 80. The difference between sales in EU and Nafta can be calculated by the formula:
- 2 period - (80-50) * 0.0014
- 3 period - (80-50) * 0.0014 + (80-50) * 0.0014 * 0.6
- 4 period - (80-50) * 0.0014 + (80-50) * 0.0014 * 0.6 + (80-50) * 0.0014 * 0.6 * 0.6
These specific features form strategy of investment in corporate advertising. You should maximize advertising budget at the beginning of the game for the market with great potential for growth, but gradually reduce it to 5 period:
- 1 period - 99;
- 2 period - 99;
- 3 period - 85;
- 4 period - 70;
- 5 period - 0;
- Cumulative effect - 60% of previous investments;
- Effect of corporate advertising on market is proportional;
- Effect is equal for products 1, 2 and 3;
- Investments in the Internet market more profitable by 20%.