An Econometric Measurement of the Impact of Marketing Communication on Sales in the Indian Cement Industry

Abstract

This study analyzes the relationship between net sales revenue and Integrated Marketing Communications (IMC) viz. advertising, sales promotion, personal selling and direct marketing. It attempts to find the existence of a long-term relationship between the two variables and goes on to analyze the impact of one variable on the other and its possible implications. Seven year quarterly data of ten firms in the Indian Cement industry when analyzed reveals that there is no evidence of cointegration between the above mentioned variables, but the Vector Autoregression (VAR) model suggests that although past sales do not influence current advertising, advertising and sales promotion have a significant effect on the sales of cement after one year. The Impulse Response Function (IRF) and Forecast Error Variance Decomposition (FEVD) also support this view.

Keywords: Advertising, Cointegration, Forecast Error Variance Decomposition, Impulse Response Function, Net sales, Sales Promotion, Vector Autoregression.