Direct-to-Consumer Advertising

Direct‐to‐Consumer Advertising (DTCA) is the most common form of advertising observed for consumer packaged goods. Marketing literature has looked at several issues in DTCA such as effect of advertising on perceived product quality, consumer awareness levels and consumer inertia. However, the managerial insights that emerge from these papers are not readily transferable to other complex product categories such as prescription pharmaceuticals, where a change in regulation has reduced pharmaceutical firms\u27 costs of reaching out directly to consumers as opposed to physicians. In this context, DTCA has both market expanding and share increasing effects with significant ambiguity about the relative strengths of these effects. Market expansion occurs through constructive advertising that provides information about the disease itself including information on symptoms, possible remedies and side effects with much less emphasis on the brand. An increase in market share occurs through combative advertising that emphasizes the advantages of the brand relative to the other competing brands. Our research shows that product margins, stage of the product category lifecycle, heterogeneity in detailing productivity and the strength of intrinsic consumer preferences affect advertising outcomes in competitive markets