Advertising effectiveness in the alcoholic beverage industry of South Africa : measuring the influence of branded liquor advertising on consumption levels

Van Der Spuy, Tiaan (2011-12)

Thesis (MBA)--Stellenbosch University, 2011.


ENGLISH ABSTRACT: Objective: The purpose of the present study is to empirically examine the relationship between brand-level alcohol advertising and alcohol consumption in South Africa. The effect that price has on alcohol consumption is also investigated in the analysis. Method: Using secondary quantitative time series data that include observations of brand-level sales volume, segment volume, brand-level market share, brand-level retail selling price (RSP) and brand-level advertising expenditure (spanning a 32 month period), statistical techniques such as tests for stationarity and co-integration were conducted to assess the association between the various constructs. Results: It was found that between January 2007 and August 2009, a period that included an economic downturn, own-brand advertising had little or no effect on brand-level sales volume (or consumption), segment sales volume and brand level market share. Conversely, price had a significant effect on sales volume, explaining between 48% and 56% of the variation in sales volume at brand-level and between 21% and 31% of the variation in brand-level market share. Conclusion: The results suggest that brand-level advertising has no significant immediate effect on consumption levels in the South African liquor industry, while the price of alcoholic beverages does have a significant immediate effect.

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