Temporal Differences in the Role of Marketing Communication in New Product Categories

Abstract
The authors investigate the changing role of marketing communication over the life cycle of a new product category. They postulate two effects of marketing communication on consumers’ choices: an 㤼㸳indirect effect㤼㸴 through reduction of uncertainty about product quality and a 㤼㸳direct effect㤼㸴 (i.e., more is better). The authors expect that the indirect effect is relatively larger in the early, postlaunch stages. They develop a structural model of demand that allows for such temporal differences in the roles of marketing communication. They use a random coefficients discrete choice model with a Bayesian learning process to model physician learning about new drugs and market-level data for the prescription antihistamines category. They find that marketing communication has a primarily indirect effect 6㤼㸶14 months after introduction but that the direct effect subsequently dominates. The results suggest that firms should follow a pattern of heavier communication at the introduction phase followed by lower levels.

Keywords: marketing communication, detailing, learning models, discrete choice models, structural models, generalized method of moments, pharmaceuticals, antihistamines

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