- Are there returns from ancillary marketing communication expenditure? - A case study in the Australian financial services sector
- Number of pages
- Amsterdam: Amsterdam Business School
- Document type
- Working paper
- Faculty of Economics and Business (FEB)
- Amsterdam Business School Research Institute (ABS-RI)
This paper tests if there are returns from investing in marketing communications expenditure (MCE) by using excess risk weighted accounting earnings as an output metric.We utilise panel data techniques and a case study of Australian credit unions that successfully invest in core relational activities designed to establish customer assets, and who also undertake the option to heavily invest in ancillary MCE. The data allows a direct test of the Gronroos (1997) hypothesis - that resources are better spent on relational marketing to develop core customer assets. We determine that there are size, leverage and marketing mix effects. For large credit unions MCE is financially successful, driven by a marketing leverage effect determined by the current level of earnings and transaction marketing. For small credit unions, the Gronroos’ hypothesis is supported.
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