Academic journal article Agricultural and Resource Economics Review

Consumer Response to Perceived Value and Generic Advertising

Academic journal article Agricultural and Resource Economics Review

Consumer Response to Perceived Value and Generic Advertising

Article excerpt

As marketers, we should be committed to the proposition that the creation of customer value must be the reason for the firm's existence and certainly for its success. (Slater 1997)

The marketing literature has long stressed the critical role of perceived value in consumer choice; academic and marketing researchers focus on the importance of "value creation" with respect to consumption and purchase intent. While definitions of perceived value vary widely, the need for its creation and maintenance is rarely disputed when it comes to the successful marketing of goods and services (Slater 1997, Zeithaml 1988, Sheth, Newman, and Gross 1991), A number of unidimensional and multidimensional approaches to defining perceived value have been proffered over the years, but it is often simply defined as the quality obtained for the price paid (Zeithaml 1988), Understanding how perceived value affects consumption and how value can be enhanced through advertising is essential to creating and enacting a successful marketing plan.

There is a complicated relationship between marketing efforts (advertising) and value creation (perceived value) in generating consumer demand for and consumption of a good or service. The standard role of advertising (at least within the economics literature) has often been as a direct driver of purchase and consumption decisions. However, that premise is at odds with the extant literature on marketing. Several studies have noted that for advertising (generic or brand) that has a direct impact on consumption one would expect a proportionate increase in sales for every additional dollar spent (ceteris paribus), which generally is not the case (Dodds, Monroe, and Grewal 1991), Rather, the marketing literature points to a more nuanced role for advertising, one that is mitigated by consumers' perceptions of value. Within this context, the role of advertising is to build a product's perceived value, which has a direct effect on consumer intent.

Of particular interest is the effect that generic advertising has on perceived value. Unfortunately, few studies have been able to use a consumer-level data set robust enough to fully explore that interaction (Kinnucan and Venkateswaran 1990). Generic advertising differs from brand advertising in that it seeks to increase consumption of all items in a product category rather than addressing a single brand with a unilateral focus (Brown and Lee 1997), Several studies have investigated the effect of generic advertising on consumption but not the role played by perceived value. Capps, Bressler, and Williams (2004) found that brand advertising did not increase total product-category sales; instead, it promoted brand-switching among existing customers. Generic advertising, on the other hand, has been shown to increase demand and consumption (Rickard et al. 2011, Zheng and Kaiser 2008). Thus, we address two questions: (i) to what degree does generic advertising impact value perception and, in turn, enhance consumption and (ii) how can generic advertising be better leveraged to maximize the creation of perceived value?

This study incorporates a rich consumer-level data set gathered by the Florida Department of Citrus (FDOC) and its marketing research partner, Issues & Answers Network, Inc. The FDOC conducts a monthly advertising tracking study through a survey of U.S. consumers that includes measures of their behavior and attitudes regarding 100 percent orange juice, their awareness of generic (by FDOC) and brand advertising, and their perceived value for 100 percent orange juice.

Our analysis indicates that perceived value is strongly associated with increased consumption frequency and is influenced by consumers' awareness of generic advertising. Thus, generic promotions should involve strategies that enhance the perceived value of the product to consumers. Moreover, the strategic focus of generic promotion efforts must extend beyond general awareness to how key messages in the ads are communicated. …

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