Market Competitiveness Has an Impact on Marketing Expenditures in the CPG Manufacturing Industry

摘要

The HHI has a crucial role in explaining firm-specific heterogeneity of trade promotions. To be more specific, the heterogeneity of firm-specific variables is associated with market competitiveness (HHI), and their impact on trade promotions differs with the given level of HHI. HI: Firms with high market power (high HHI) spend less in trade promotion. This explains differences in the trade promotions of large and small manufacturers: small manufacturers are likely to pay up-front for trade promotions to keep products from failing and disrupting their business (Sudhir and Rao 2006), whereas large manufacturers negotiate more favorable contracts and hence, are likely to pay smaller fees (Rao and Mahi 2003) H2: A firm is less willing to pay for trade promotions when a firm when a firm size is as large as recognized by a market within the CPG manufacturing industry. H3a: The effect of advertising expenditures on trade promotions as the complementary function is positive in a concentrated market., H3b: The effect of advertising expenditures on trade promotions as the substituted function is negative in a competitive market.