Advertising Impact

Quant Mark Econ (2009) 7:207–236 DOI 10. 1007/s11129-009-9066-z The effect of advertising on brand awareness and perceived quality: An empirical investigation using panel data C. Robert Clark  · Ulrich Doraszelski  · Michaela Draganska Received: 11 December 2007 / Accepted: 2 April 2009 / Published online: 8 May 2009  © Springer Science + Business Media, LLC 2009 Abstract We use a panel data set that combines annual brand-level advertising expenditures for over three hundred brands with measures of brand awareness and perceived quality from a large-scale consumer survey to study the effect of advertising.Advertising is modeled as a dynamic investment in a brand’s stocks of awareness and perceived quality and we ask how such an investment changes brand awareness and quality perceptions. Our panel data allow us to control for unobserved heterogeneity across brands and to identify the effect of advertising from the time-series variation within brands. They also allow us to account for the endogeneity of advertising through recently developed dynamic panel data estimation techniques. We ? nd that advertising has consistently a signi? cant positive effect on brand awareness but no signi? ant effect on perceived quality. Keywords Advertising  · Brand awareness  · Perceived quality  · Dynamic panel data methods JEL Classi? cation L15  · C23  · H37 C. R. Clark Institute of Applied Economics, HEC Montreal and CIRPEE, 3000 Chemin de la Cote-Sainte-Catherine, Montreal, Quebec H3T 2A7, Canada e-mail: robert. [email  protected] ca U. Doraszelski Department of Economics, Harvard University, 1805 Cambridge Street, Cambridge, MA 02138, USA e-mail: [email  protected] edu ) M. Draganska (B Graduate School of Business, Stanford University, Stanford, CA 94305-5015, USA e-mail: [email  protected] tanford. edu 208 C. R. Clark et al. 1 Introduction In 2006 more than $280 billion were spent on advertising in the U. S. , well above 2% of GDP. By inve sting in advertising, marketers aim to encourage consumers to choose their brand. For a consumer to choose a brand, two conditions must be satis? ed: First, the brand must be in her choice set. Second, the brand must be preferred over all the other brands in her choice set. Advertising may facilitate one or both of these conditions. In this research we empirically investigate how advertising affects these two conditions.To disentangle the impact on choice set from that on preferences, we use actual measures of the level of information possessed by consumers about a large number of brands and of their quality perceptions. We compile a panel data set that combines annual brand-level advertising expenditures with data from a large-scale consumer survey, in which respondents were asked to indicate whether they were aware of different brands and, if so, to rate them in terms of quality. These data offer the unique opportunity to study the role of advertising for a wide range of brands ac ross a number of different product categories.The awareness score measures how well consumers are informed about the existence and the availability of a brand and hence captures directly the extent to which the brand is part of consumers’ choice sets. The quality rating measures the degree of subjective vertical product differentiation in the sense that consumers are led to perceive the advertised brand as being better. Hence, our data allow us to investigate the relationship between advertising and two important dimensions of consumer knowledge.The behavioral literature in marketing has highlighted the same two dimensions in the form of the size of the consideration set and the relative strength of preferences (Nedungadi 1990; Mitra and Lynch 1995). It is, of course, possible that advertising also affects other aspects of consumer knowledge. For example, advertising may generate some form of subjective horizontal product differentiation that is unlikely to be re? ected in ei ther brand awareness or perceived quality. In a recent paper Erdem et al. (2008), however, report that advertising focuses on horizontal attributes only for one out of the 19 brands examined.Understanding the channel through which advertising affects consumer choice is important for researchers and practitioners alike for several reasons. For example, Sutton’s (1991) bounds on industry concentration in large markets implicitly assume that advertising increases consumers’ willingness to pay by altering quality perceptions. While pro? ts increase in perceived quality, they may decrease in brand awareness (Fershtman and Muller 1993; Boyer and Moreaux 1999), thereby stalling the competitive escalation in advertising at the heart of the endogenous sunk cost theory.Moreover, Doraszelski and Markovich (2007) show that even in small markets industry dynamics can be very different depending on the nature of advertising. From an empirical perspective, when estimating a demand mo del, advertising could be modeled Effect of advertising on brand awareness and perceived quality 209 as affecting the choice set or as affecting the utility that the consumer derives from a brand. If the role of advertising is mistakenly speci? ed as affecting quality perceptions (i. e. , preferences) rather than brand awareness as it often is, then the estimated parameters may be biased.In her study of the U. S. personal computer industry, Sovinsky Goeree (2008) ? nds that traditional demand models overstate price elasticities because they assume that consumers are aware of—and hence choose among—all brands in the market when in actuality most consumers are aware of only a small fraction of brands. For our empirical analysis we develop a dynamic estimation framework. Brand awareness and perceived quality are naturally viewed as stocks that are built up over time in response to advertising (Nerlove and Arrow 1962).At the same time, these stocks depreciate as consumers forget past advertising campaigns or as an old campaign is superseded by a new campaign. Advertising can thus be thought of as an investment in brand awareness and perceived quality. The dynamic nature of advertising leads us to a dynamic panel data model. In estimating this model we confront two important problems, namely unobserved heterogeneity across brands and the potential endogeneity of advertising. We discuss these below. When estimating the effect of advertising across brands we need to keep in mind that they are different in many respects.Unobserved factors that affect both advertising expenditures and the stocks of perceived quality and awareness may lead to spurious positive estimates of the effect of advertising. Put differently, if we detect an effect of advertising, then we cannot be sure if this effect is causal in the sense that higher advertising expenditures lead to higher brand awareness and perceived quality or if it is spurious in the sense that different brand s have different stocks of perceived quality and awareness as well as advertising expenditures.For example, although in our data the brands in the fast food category on average have high advertising and high awareness and the brands in the cosmetics and fragrances category have low advertising and low awareness, we cannot infer that advertising boosts awareness. We can only conclude that the relationship between advertising expenditures, perceived quality, and brand awareness differs from category to category or even from brand to brand. Much of the existing literature uses cross-sectional data to discern a relationship between advertising expenditures and perceived quality (e. g. Kirmani and Wright 1989; Kirmani 1990; Moorthy and Zhao 2000; Moorthy and Hawkins 2005) in an attempt to test the idea that consumers draw inferences about the brand’s quality from the amount that is spent on advertising it (Nelson 1974; Milgrom and Roberts 1986; Tellis and Fornell 1988). With cross -sectional data it is dif? cult to account for unobserved heterogeneity across brands. Indeed, if we neglect permanent differences between brands, then we ? nd that both brand awareness and perceived quality are positively correlated with advertising expenditures, thereby replicating the earlier studies.Once we make full use of our panel data and account for unobserved 210 C. R. Clark et al. heterogeneity, however, the effect of advertising expenditures on perceived quality disappears. 1 Our estimation equations are dynamic relationships between a brand’s current stocks of perceived quality and awareness on the left-hand side and the brand’s previous stocks of perceived quality and awareness as well as its own and its rivals’ advertising expenditures on the right-hand side. In this context, endogeneity arises for two reasons.First, the lagged dependent variables are by construction correlated with all past error terms and therefore endogenous. As a consequence, traditional ? xed-effect methods are necessarily inconsistent. 2 Second, advertising expenditures may also be endogenous for economic reasons. For instance, media coverage such as news reports may affect brand awareness and perceived quality beyond the amount spent on advertising. To the extent that these shocks to the stocks of perceived quality and awareness of a brand feed back into decisions about advertising, say because the brand manager opts to advertise less if a news report has generated suf? ient awareness, they give rise to an endogeneity problem. To resolve the endogeneity problem we use the dynamic panel data methods developed by Arellano and Bond (1991), Arellano and Bover (1995), and Blundell and Bond (1998). The key advantage is that these methods do not rely on the availability of strictly exogenous explanatory variables or instruments. This is an appealing methodology that has been widely applied (e. g. , Acemoglu and Robinson 2001; Durlauf et al. 2005; Zhang and L i 2007) because valid instruments are often hard to come by. Further, since these methods involve ? st differencing, they allow us to control for unobserved factors that affect both advertising expenditures and the stocks of perceived quality and awareness and may lead to spurious positive estimates of the effect of advertising. In addition, our approach allows for factors other than advertising to affect a brand’s stock of perceived quality and awareness to the extent that these factors are constant over time. Our main ? nding is that advertising expenditures have a signi? cant positive effect on brand awareness but no signi? cant effect on perceived quality.These results appear to be robust across a wide range of speci? cations. Since awareness is the most basic kind of information a consumer can have for a brand, we conclude that an important role of advertising is information provision. On the other hand, our results indicate that advertising is not likely to alter consum ers’ quality perceptions. This conclusion calls for a reexamination of the implicit assumption underlying Sutton’s (1991) endogenous sunk cost theory. It also suggests that advertising should be modeled as affecting the choice set and not just utility when estimating demand.Finally, our ? ndings lend empirical 1 Another way to get around this issue is to take an experimental approach, as in Mitra and Lynch (1995). 2 This source of endogeneity is not tied to advertising in particular; rather it always arises in estimating dynamic relationships in the presence of unobserved heterogeneity. An exception is the (rather unusual) panel-data setting where one has T > ? instead of N > ?. In this case the within estimator is consistent (Bond 2002, p. 5). Effect of advertising on brand awareness and perceived quality 211 upport to the view that advertising is generally procompetitive because it disseminates information about the existence, the price, and the attributes of product s more widely among consumers (Stigler 1961; Telser 1964; Nelson 1970, 1974). The remainder of the paper proceeds as follows. In Sections 2 and 3 we explain the dynamic investment model and the corresponding empirical strategy. In Section 4 we describe the data and in Section 5 we present the results of the empirical analysis. Section 6 concludes. 2 Model speci? cation We develop an empirical model based on the classic advertising-as-investment model of Nerlove and Arrow (1962).Related empirical models are the basis of current research on advertising (e. g. , Naik et al. 1998; Dube et al. 2005; Doganoglu and Klapper 2006; Bass et al. 2007). Naik et al. (1998), in particular, ? nd that the Nerlove and Arrow (1962) model provides a better ? t than other models that have been proposed in the literature such as Vidale and Wolfe (1957), Brandaid (Little 1975), Tracker (Blattberg and Golanty 1978), and Litmus (Blackburn and Clancy 1982). We extend the Nerlove and Arrow (1962) framework in two respects. First, we allow a brand’s stocks of awareness and perceived quality to be affected by the advertising of its competitors.This approach captures the idea that advertising takes place in a competitive environment where brands vie for the attention of consumers. The advertising of competitors may also be bene? cial to a brand if it draws attention to the entire category and thus expands the relevant market for the brand (e. g. , Nedungadi 1990; Kadiyali 1996). Second, we allow for a stochastic component in the effect of advertising on the stocks of awareness and perceived quality to re? ect the success or failure of an advertising campaign and other unobserved in? uences such as the creative quality of the advertising copy, media selection, or scheduling.More formally, we let Qit be the stock of perceived quality of brand i at the start of period t and Ait the stock of its awareness. We further let Eit? 1 denote the advertising expenditures of brand i over the cou rse of period t ? 1 and E? it? 1 = (E1t? 1 , . . . , Ei? 1t? 1 , Ei+1t? 1 , . . . , Ent? 1 ) the advertising expenditures of its competitors. Then, at the most general level, the stocks of perceived quality and awareness of brand i evolve over time according to the laws of motion Qit = git (Qit? 1 , Eit? 1 , E? it? 1 , ? it ), Ait = hit (Ait? 1 , Eit? 1 , E? it? 1 , ? t ), where git ( ·) and hit ( ·) are brand- and time-speci? c functions. The idiosyncratic error ? it captures the success or failure of an advertising campaign along with all other omitted factors. For example, the quality of the advertising campaign may matter just as much as the amount spent on it. By recursively substituting 212 C. R. Clark et al. for the lagged stocks of perceived quality and awareness we can write the current stocks as functions of all past advertising expenditures and the current and all past error terms. This shows that these shocks to brand awareness and perceived quality are persistent ov er time.For example, the effect of a particularly good (or bad) advertising campaign may linger and be felt for some time to come. We model the effect of competitors’ advertising on brand awareness and perceived quality in two ways. First, we consider a brand’s â€Å"share of voice. † We use its advertising expenditures, Eit? 1 , relative to the average amount spent on advertising by rival brands in the brand’s subcategory or category, E? it? 1 . 3 To the extent that brands compete with each other for the attention of consumers, a brand may have to outspend its rivals to cut through the clutter.If so, then what is important may not be the absolute amount spent on advertising but the amount relative to rival brands. Second, we consider the amount of advertising in the entire market by including the average amount spent on advertising by rival brands in the brand’s subcategory or category. Advertising is market expanding if it attracts consumers to t he entire category but not necessarily to a particular brand. In this way, competitors’ advertising may have a positive in? uence on, say, brand awareness. Taken together, our estimation equations are Qit = ? i + ? t + ? Qit? 1 + f (Eit? 1 , E? it? 1 ) + ? t , Ait = ? i + ? t + ? Ait? 1 + f (Eit? 1 , E? it? 1 ) + ? it . (1) (2) Here ? i is a brand effect that captures unobserved heterogeneity across brands and ? t is a time effect to control for possible systematic changes over time. The time effect may capture, for example, that consumers are systematically informed about a larger number of brands due to the advent of the internet and other alternative media channels. Through the brand effect we allow for factors other than advertising to affect a brand’s stocks of perceived quality and awareness to the extent that these factors are constant over time.For example, consumers may hear about a brand and their quality perceptions may be affected by word of mouth. Similarl y, it may well be the case that consumers in the process of purchasing a brand become more informed about it and that their quality perceptions change, especially for high-involvement brands. Prior to purchasing a car, say, many consumers engage in research about the set of available cars and their respective characteristics, including quality ratings from sources such as car magazines and Consumer Reports.If these effects do not vary over time, then we fully account for them in our estimation because the dynamic panel data methods we employ involve ? rst differencing. The parameter ? measures how much of last period’s stocks of perceived quality and awareness are carried forward into this period’s stocks; 1 ? ? can 3 The Brandweek Superbrands survey reports on only the top brands (in terms of sales) in each subcategory or category. The number of brands varies from 3 for some subcategories to 10 for others. We therefore use the average, rather than the sum, of competit ors’ advertising.Effect of advertising on brand awareness and perceived quality 213 therefore be interpreted as the rate of depreciation of these stocks. Note that in the estimation we allow all parameters to be different across our estimation equations. For example, we do not presume that the carryover rates for perceived quality and brand awareness are the same. The function f ( ·) represents the response of brand awareness and perceived quality to the advertising expenditures of the brand and potentially also those of its rivals. In the simplest case absent competition we specify this function as 2 f (Eit? ) = ? 1 Eit? 1 + ? 2 Eit? 1 . This functional form is ? exible in that it allows for a nonlinear effect of advertising expenditures but does not impose one. Later on in Section 5. 6 we demonstrate the robustness of our results by considering a number of additional functional forms. To account for competition in the share-of-voice speci? cation, we set f Eit? 1 , E? it? 1 = ? 1 Eit? 1 E? it? 1 + ? 2 Eit? 1 E? it? 1 2 and in the total-advertising speci? cation, we set 2 f Eit? 1 , E? it? 1 = ? 1 Eit? 1 + ? 2 Eit? 1 + ? 3 E? it? 1 . Estimation strategy Equations 1 and 2 are dynamic relationships that feature lagged dependent variables on the right-hand side. When estimating, we confront the problems of unobserved heterogeneity across brands and the endogeneity of advertising. In our panel-data setting, ignoring unobserved heterogeneity is akin to dropping the brand effect ? i from Eqs. 1 and 2 and then estimating them by ordinary least squares. Since this approach relies on both cross-sectional and time-series variation to identify the effect of advertising, we refer to it as â€Å"pooled OLS† (POLS) in what follows.To account for unobserved heterogeneity we include a brand effect ? i and use the within estimator that treats ? i as a ? xed effect. We follow the usual convention in microeconomic applications that the term â€Å"? xed effectâ €  does not necessarily mean that the effect is being treated as nonrandom; rather it means that we are allowing for arbitrary correlation between the unobserved brand effect and the observed explanatory variables (Wooldridge 2002, p. 251). The within estimator eliminates the brand effect by subtracting the within-brand mean from Eqs. 1 and 2. Hence, the identi? ation of the slope parameters that determine the effect of advertising relies solely on variation over time within brands; the information in the between-brand cross-sectional relationship is not used. We refer to this approach as â€Å"? xed effects† (FE). While FE accounts for unobserved heterogeneity, it suffers from an endogeneity problem. In our panel-data setting, endogeneity arises for two reasons. First, since Eqs. 1 and 2 are inherently dynamic, the lagged stocks of perceived 214 C. R. Clark et al. quality and awareness may be endogenous. More formally, Qit? 1 and Ait? 1 are by construction correlated with ? s for s < t. The within estimator subtracts the within-brand mean from Eqs. 1 and 2. The resulting regressor, say Qit? 1 ? Qi in the case of perceived quality, is correlated with the error term ? it ? ?i since ? i contains ? it? 1 along with all higher-order lags. Hence, FE is necessarily inconsistent. Second, advertising expenditures may also be endogenous for economic reasons. For instance, media coverage such as news reports may directly affect brand awareness and perceived quality. Our model treats media coverage other than advertising as shocks to the stocks of perceived quality and awareness.To the extent that these shocks feed back into decisions about advertising, say because the brand manager opts to advertise less if a news report has generated suf? cient awareness, they give rise to an endogeneity problem. More formally, it is reasonable to assume that Eit? 1 , the advertising expenditures of brand i over the course of period t ? 1, are chosen at the beginning of perio d t ? 1 with knowledge of ? it? 1 and higher-order lags and that therefore Eit? 1 is correlated with ? is for s < t. We apply the dynamic panel-data method proposed by Arellano and Bond (1991) to deal with both unobserved heterogeneity and endogeneity.This methodology has the advantage that it does not rely on the availability of strictly exogenous explanatory variables or instruments. This is welcome because instruments are often hard to come by, especially in panel-data settings: The problem is ? nding a variable that is a good predictor of advertising expenditures and is uncorrelated with shocks to brand awareness and perceived quality; ? nding a variable that is a good predictor of lagged brand awareness and perceived quality and uncorrelated with current shocks to brand awareness and perceived quality is even less obvious.The key idea of Arellano and Bond (1991) is that if the error terms are serially uncorrelated, then lagged values of the dependent variable and lagged values of the endogenous right-hand-side variables represent valid instruments. To see this, take ? rst differences of Eq. 1 to obtain Qit ? Qit? 1 = (? t ? ?t? 1 ) + ? (Qit? 1 ? Qit? 2 ) + f (Eit? 1 ) ? f (Eit? 2 ) + (? it ? ?it? 1 ), (3) where we abstract from competition to simplify the notation. Eliminating the brand effect ? i accounts for unobserved heterogeneity between brands. The remaining problem with estimating Eq. 3 by least-squares is that Qit? 1 ? Qit? is by construction correlated with ? it ? ?it? 1 since Qit? 1 is correlated with ? it? 1 by virtue of Eq. 1. Moreover, as we have discussed above, Eit? 1 may also be correlated with ? it? 1 for economic reasons. We take advantage of the fact that we have observations on a number of periods in order to come up with instruments for the endogenous variables. In particular, this is possible starting in the third period where Eq. 3 becomes Qi3 ? Qi2 = (? 3 ? ?2 ) + ? (Qi2 ? Qi1 ) + f (Ei2 ) ? f (Ei1 ) + (? i3 ? ?i2 ). Effect of adve rtising on brand awareness and perceived quality 215 In this case Qi1 is a valid instrument for (Qi2 ?Qi1 ) since it is correlated with (Qi2 ? Qi1 ) but uncorrelated with (? i3 ? ?i2 ) and, similarly, Ei1 is a valid instrument for ( f (Ei2 ) ? f (Ei1 )). In the fourth period Qi1 and Qi2 are both valid instruments since neither is correlated with (? i4 ? ?i3 ) and, similarly, Ei1 and Ei2 are both valid instruments. In general, for lagged dependent variables and for endogenous right-hand-side variables, levels of these variables that are lagged two or more periods are valid instruments. This allows us to generate more instruments for later periods. The resulting estimator is referred to as â€Å"difference GMM† (DGMM).A potential dif? culty with the DGMM estimator is that lagged levels may be poor instruments for ? rst differences when the underlying variables are highly persistent over time. Arellano and Bover (1995) and Blundell and Bond (1998) propose an augmented estimator in which the original equations in levels are added to the system. The idea is to create a stacked data set containing differences and levels and then to instrument differences with levels and levels with differences. The required assumption is that brand effects are uncorrelated with changes in advertising expenditures.This estimator is commonly referred to as â€Å"system GMM† (SGMM). In Section 5 we report and compare results for DGMM and SGMM. It is important to test the validity of the instruments proposed above. Following Arellano and Bond (1991) we report a Hansen J test for overidentifying restrictions. This test examines whether the instruments are jointly exogenous. We also report the so-called difference-in-Hansen J test to examine speci? cally whether the additional instruments for the level equations used in SGMM (but not in DGMM) are valid. Arellano and Bond (1991) further develop a test for second-order serial correlation in the ? st differences of the error te rms. As described above, both GMM estimators require that the levels of the error terms be serially uncorrelated, implying that the ? rst differences are serially correlated of at most ? rst order. We caution the reader that the test for second-order serial correlation is formally only de? ned if the number of periods in the sample is greater than or equal to 5 whereas we observe a brand on average for just 4. 2 periods in our application. Our preliminary estimates suggest that the error terms are unlikely to be serially uncorrelated as required by Arellano and Bond (1991).The AR(2) test described above indicates ? rst-order serial correlation in the error terms. An AR(3) test for third-order serial correlation in the ? rst differences of the error terms, however, indicates the absence of second-order serial correlation in the error terms. 4 In this case, Qit? 2 and Eit? 2 are no longer valid instruments for Eq. 3. Intuitively, because Qit? 2 is correlated with ? it? 2 by virtue of Eq. 1 and ? it? 2 is correlated with ? it? 1 by ? rst-order serial correlation, Qit? 2 is correlated 4 Of course, the AR(3) test uses less observations than the AR(2) test and is therefore also less powerful. 16 C. R. Clark et al. with ? it? 1 in Eq. 3, and similarly for Eit? 2 . Fortunately, however, Qit? 3 and Eit? 3 remain valid instruments because ? it? 3 is uncorrelated with ? it? 1 . We carry out the DGMM and SGMM estimation using STATA’s xtabond2 routine (Roodman 2007). We enter third and higher lags of either brand awareness or perceived quality, together with third and higher lags of advertising expenditures as instruments. In addition to these â€Å"GMM-style† instruments, for the difference equations we enter the time dummies as â€Å"IV-style† instruments. We also apply the ? ite-sample correction proposed by Windmeijer (2005) which corrects for the two-step covariance matrix and substantially increases the ef? ciency of both GMM estimators. Finally, we compute standard errors that are robust to heteroskedasticity and arbitrary patterns of serial correlation within brands. 4 Data Our data are derived from the Brandweek Superbrands surveys from 2000 to 2005. Each year’s survey lists the top brands in terms of sales during the past year from 25 broad categories. Inside these categories are often a number of more narrowly de? ned subcategories. Table 1 lists the categories along with their subcategories.The surveys report perceived quality and awareness scores for the current year and the advertising expenditures for the previous year by brand. Perceived quality and awareness scores are calculated by Harris Interactive in their Equitrend brand-equity study. Each year Harris Interactive surveys online between 20, 000 and 45, 000 consumers aged 15 years and older in order to determine their perceptions of a brand’s quality and its level of awareness for approximately 1, 000 brands. 5 To ensure that the respondents accu rately re? ect the general population their responses are propensity weighted. Each respondent rates around 80 of these brands.Perceived quality is measured on a 0–10 scale, with 0 meaning unacceptable/poor and 10 meaning outstanding/ extraordinary. Awareness scores vary between 0 and 100 and equal the percentage of respondents that can rate the brand’s quality. The quality rating is therefore conditional on the respondent being aware of the brand. 6 5 The exact wording of the question is: â€Å"We will display for you a list of brands and we are asking you to rate the overall quality of each brand using a 0 to 10 scale, where ‘0’ means ‘Unacceptable/Poor Quality’, ‘5’ means ‘Quite Acceptable Quality’ and ‘10’ means ‘Outstanding/ Extraordinary Quality’.You may use any number from 0 to 10 to rate the brands, or use 99 for ‘No Opinion’ option if you have absolutely no opinion abou t the brand. † Panelists are being incentivized through sweepstakes on a periodic basis but are not paid for a particular survey. 6 The 2000 Superbrands survey does not separately report perceived quality and salience scores. We received these scores directly from Harris Interactive. 2000 is the ? rst year for which we have been able to obtain perceived quality and salience scores for a large number of brands.Starting with the 2004 and 2005 Superbrands surveys, salience is replaced by a new measure called â€Å"familiarity. † For these two years we received salience scores directly from Harris Interactive. The contemporaneous correlation between salience and familiarity is 0. 98 and signi? cant with a p-value of 0. 000. Effect of advertising on brand awareness and perceived quality Table 1 Categories and subcategories 1. Apparel 2. Appliances 3. Automobiles a. general automobiles b. luxury c. subcompact d. sedan/wagon e. trucks/suvs/vans 4. Beer, wine, liquor a. beer b. wine c. malternatives d. iquor 5. Beverages a. general b. new age/sports/water 6. Computers a. software b. hardware 7. Consumer electronics 8. Cosmetics and fragrances a. color cosmetics b. eye color c. lip color d. women’s fragrances e. men’s fragrances 9. Credit cards 10. Entertainment 11. Fast food 12. Financial services 13. Food a. ready to eat cereal b. cereal bars c. cookies d. cheese e. crackers f. salted snacks g. frozen dinners and entrees Items in italics have been removed 217 h. frozen pizza i. spaghetti sauce j. coffee k. ice cream l. refrigerated orange juice m. refrigerated yogurt n. oy drinks o. luncheon meats p. meat alternatives q. baby formula/electrolyte solutions r. pourable salad dressing 14. Footwear 15. Health and beauty a. bar soap b. toothpaste c. shampoo d. hair color 16. Household a. cleaner b. laundry detergents c. diapers d. facial tissue e. toilet tissue f. automatic dishwater detergent 17. Petrol a. oil companies b. automotive aftercare/ lube 18. Pharmaceutical OTC a. allergy/cold medicine b. stomach/antacids c. analgesics 19. Pharmaceutical prescription 20. Retail 21. Telecommunications 22. Tobacco 23. Toys 24. Travel 25. World Wide WebWe supplement the awareness and quality measures with advertising expenditures that are taken from TNS Media Intelligence and Competitive Media Reporting. These advertising expenditures encompass spending in a wide range of media: Magazines (consumer magazines, Sunday magazines, local magazines, and business-to-business magazines), newspaper (local and national newspapers), television (network TV, spot TV, syndicated TV, and network cable TV), radio (network, national spot, and local), Spanish-language media (magazines, newspapers, and TV networks), internet, and outdoor.After eliminating categories and subcategories where observations are not at the brand level (apparel, entertainment, ? nancial services, retail, world wide web) or where the data are suspect (tobacco), we are left w ith 19 categories (see again Table 1). We then drop all private labels and all brands for which 218 C. R. Clark et al. we do not have perceived quality and awareness scores as well as advertising expenditures for at least two years running. This leaves us with 348 brands. Table 2 contains descriptive statistics for the overall sample and also by category. In the overall sample the average awareness score is 69. 5 and the average perceived quality score is 6. 36. The average amount spent on advertising is around $66 million per year. There is substantial variation in these measures across categories. The variation in perceived quality (coef? cient of variation is 0. 11 overall, ranging from 0. 04 for appliances to 0. 13 for computers) tends to be lower than the variation in brand awareness (coef? cient of variation is 0. 28 overall, ranging from 0. 05 for appliances to 0. 46 for telecommunications), in line with the fact the quality rating is conditional on the respondent being aware of the brand.The contemporaneous correlation between brand awareness and perceived quality is 0. 60 and signi? cant with a p-value of 0. 000. The contemporaneous correlation between advertising expenditures and the change in brand awareness is 0. 0488 and signi? cant with a p-value of 0. 0985 and the contemporaneous correlation between advertising expenditures and the change in perceived quality is 0. 0718 and signi? cant with a p-value of 0. 0150. These correlations anticipate the spurious correlation between both brand awareness and perceived quality and advertising expenditures if permanent differences between brands are neglected (POLS estimator).We will see though that the effect of advertising expenditures on perceived quality Table 2 Descriptive statistics # obs # brands Brand awareness Perceived Advertising (0–100) quality (0–10) ($1,000,000) Mean Std. dev. Mean Std. dev. Mean Std. dev. Overall Appliances Automobiles Beer, wine, liquor Beverages Computers Cons umer electronics Cosmetics and fragrances Credit cards Fast food Food Footwear Health and beauty Household Petrol Pharmaceutical OTC Pharmaceutical prescription Telecommunications Toys Travel 1,478 348 21 137 98 95 79 29 70 29 60 247 38 54 128 48 56 31 52 25 181 4 30 24 22 17 7 19 6 12 65 8 11 31 13 15 10 11 5 38 69. 5 85. 09 67. 81 62. 23 84. 57 59. 80 67. 83 49. 37 70. 97 93. 83 80. 18 64. 95 82. 50 73. 83 60. 52 76. 96 29. 97 49. 33 72. 12 59. 48 19. 43 4. 54 6. 72 10. 13 13. 84 23. 05 18. 68 15. 75 18. 08 5. 32 14. 94 18. 98 9. 80 16. 03 17. 19 13. 89 9. 69 22. 86 9. 74 15. 43 6. 36 7. 35 6. 51 5. 68 6. 51 6. 41 6. 60 5. 83 6. 24 6. 28 6. 66 6. 39 6. 67 6. 66 5. 95 6. 79 5. 54 5. 28 6. 95 6. 26 0. 70 0. 32 0. 59 0. 72 0. 58 0. 81 0. 73 0. 52 0. 73 0. 42 0. 65 0. 42 0. 41 0. 56 0. 30 0. 37 0. 67 0. 52 0. 32 0. 52 66. 21 118. 52 41. 87 33. 19 99. 85 64. 62 36. 78 45. 11 41. 33 42. 19 130. 43 130. 7 104. 83 160. 66 38. 02 47. 48 174. 54 109. 77 214. 80 156. 23 13. 93 13. 81 40. 27 46. 89 27. 28 33. 44 21. 80 25. 43 33. 54 34. 65 38. 71 18. 13 76. 23 36. 40 367. 93 360. 54 108. 55 54. 36 25. 41 25. 88 Effect of advertising on brand awareness and perceived quality 219 disappears once unobserved heterogeneity is accounted for (FE and GMM estimators). The intertemporal correlation is 0. 98 for brand awareness, 0. 95 for perceived quality, and 0. 93 for advertising expenditures. This limited amount of intertemporal variation warrants preferring the SGMM over the DGMM estimator.At the same time, however, it constrains how ? nely we can â€Å"slice† the data, e. g. , by isolating a brand-speci? c effect of advertising expenditures on brand awareness and perceived quality. Since the FE, DGMM, and SGMM estimators rely on within-brand acrosstime variation, it is important to ensure that there is a suf? cient amount of within-brand variation in brand awareness, perceived quality, and advertising expenditures. Table 3 presents a decomposition of the standard devia tion in these variables into an across-brands and a within-brand component for the overall sample and also by category.The across-brands standard deviation is a measure of the cross-sectional variation and the within-brand standard deviation is a measure of the time-series variation. The across-brands standard deviation of brand awareness is about six times larger than the within-brand standard deviation. This ratio varies across categories and ranges from 2 for automobiles, beer, wine, liquor, and pharmaceutical prescription to 6 for health and beauty and pharmaceutical OTC. In case of perceived quality the ratio is about 4 (ranging from 1 for telecommunications to 5 for consumer electronics, credit cards, and household).Hence, while there is more crosssectional than time-series variation in our sample, the time-series variation is substantial for both brand awareness and perceived quality. Figure 1 illustrates Table 3 Variance decomposition Brand awareness (0–100) Across Ov erall Appliances Automobiles Beer, wine, liquor Beverages Computers Consumer electronics Cosmetics and fragrances Credit cards Fast food Food Footwear Health and beauty Household Petrol Pharmaceutical OTC Pharmaceutical prescription Telecommunications Toys Travel 20. 117 5. 282 6. 209 10. 181 13. 435 23. 094 19. 952 18. 054 19. 568 6. 132 16. 241 20. 417 10. 36 16. 719 20. 179 13. 339 9. 393 21. 659 11. 217 16. 063 Within 3. 415 1. 334 3. 281 4. 105 2. 915 3. 843 5. 611 3. 684 3. 903 1. 660 2. 255 4. 267 1. 772 3. 896 3. 669 2. 363 5. 772 5. 604 3. 589 3. 216 Perceived quality (0–10) Across 0. 726 0. 323 0. 561 0. 705 0. 582 0. 850 0. 800 0. 563 0. 788 0. 361 0. 702 0. 388 0. 397 0. 561 0. 415 0. 336 0. 753 0. 452 0. 360 0. 516 Within 0. 176 0. 148 0. 141 0. 186 0. 190 0. 313 0. 167 0. 208 0. 159 0. 202 0. 134 0. 167 0. 136 0. 113 0. 116 0. 129 0. 230 0. 334 0. 127 0. 153 Advertising ($1,000,000) Across 100. 823 28. 965 54. 680 41. 713 37. 505 110. 362 105. 49 38. 446 118. 05 9 159. 306 15. 655 45. 791 27. 054 18. 789 27. 227 16. 325 38. 648 317. 434 61. 419 22. 136 Within 43. 625 21. 316 32. 552 12. 406 13. 372 65. 909 114. 381 20. 053 43. 415 33. 527 7. 998 7. 640 19. 075 16. 672 20. 496 9. 080 27. 919 178. 406 18. 584 10. 909 220 .025 . 2 C. R. Clark et al. .02 Density . 01 . 015 0 .005 0 20 40 60 80 Mean brand awareness 100  ® 0 –30 .05 Density . 1 .15 –20 –10 0 10 20 Demeaned brand awareness 30  ® .8 .6 Density . 4 0 .2 0 2 4 6 Mean perceived quality 8 10  ® 0 –1. 5 1 Density 2 3 –1 –. 5 0 . 5 1 Demeaned perceived quality 1. 5  ® .015 Density . 005 . 01 0 0 00 400 600 800 1000 1200 1400 Mean advertising expenditures (millions of $)  ® 0 –600 –400 –200 0 200 400 600 Demeaned advertising expenditures (millions of $)  ® Fig. 1 Variance decomposition. Histogram of brand-mean of brand awareness, perceived quality, and advertising expenditures (left panels) and histogram of de-mean ed brand awareness, perceived quality, and advertising expenditures (right panels) the decomposition for the overall sample. The left panels show histograms of the brand-mean of brand awareness, perceived quality, and advertising expenditures and the right panels show histograms of the de-meaned variables.Again it is evident that the time-series variation is substantial for both brand awareness and perceived quality. 5 Empirical results In Tables 4 and 5 we present a number of different estimates for the effect of advertising expenditures on brand awareness and perceived quality, .005 Density . 01 . 015 .02 .025 Effect of advertising on brand awareness and perceived quality Table 4 Brand awareness POLS Lagged brand awareness Advertising Advertising2 Marginal effect of advertising at: Mean 25th pctl. 50th pctl. 75th pctl. Advertising test: ? 1 = ? 2 = 0 Speci? ation tests: Hansen J Difference-in-Hansen J Arellano & Bond AR(2) Arellano & Bond AR(3) Goodness of ? t measures: R2 -within R2 -between R2 # obs # brands FE DGMM SGMM 221 0. 942*** 0. 223*** 0. 679*** 0. 837*** (0. 00602) (0. 0479) (0. 109) (0. 0266) 0. 00535*** 0. 00687 0. 0152 0. 00627** (0. 00117) (0. 00443) (0. 0139) (0. 00300) ? 0. 00000409*** ? 0. 00000139 ? 0. 0000105 ? 0. 00000524** (0. 000000979) (0. 00000332) (0. 00000745) (0. 00000239) 0. 00481*** (0. 00107) 0. 00527*** (0. 00116) 0. 00514*** (0. 00113) 0. 00470*** (0. 00105) Reject*** 0. 00668 (0. 00412) 0. 00684 (0. 00438) 0. 00679 (0. 00430) 0. 00664 (0. 0405) 0. 0138 (0. 0129) 0. 0150 (0. 0138) 0. 0147 (0. 0135) 0. 0136 (0. 00127) 0. 00558** (0. 00269) 0. 00617** (0. 00296) 0. 00600** (0. 00288) 0. 00544** (0. 00263) Do not reject Do not reject Reject* Do not reject Do not reject Reject** Reject** Do not reject Do not reject 0. 494 0. 940 0. 851 1,148 317 Reject*** 0. 969 1,148 317 819 274 1,148 317 Standard errors in parenthesis * p = 0. 10; ** p = 0. 05; *** p = 0. 01 respectively. Starting with the simplest case absent competition, we present estimates of ? , ? 1 , and ? 2 (the coef? cients on Qit? 1 or Ait? 1 and Eit? 1 and 2 Eit? 1 ) along with the marginal effect ? 1 + 2? Eit? 1 calculated at the mean and the 25th, 50th, and 75th percentiles of advertising expenditures. The POLS estimates in the ? rst column of Tables 4 and 5 suggest a signi? cant positive effect of advertising expenditures on both brand awareness and perceived quality. In both cases we also reject the null hypothesis that advertising plays no role in determining brand awareness and perceived quality (? 1 = ? 2 = 0). Of course, as mentioned above, POLS accounts for neither unobserved heterogeneity nor endogeneity. In the next columns of Tables 4 and 5 we present FE, DGMM, and SGMM estimates that attend to these issues. 7 7 The stimates use at most 317 out of 348 brands because we restrict the sample to brands with data for two years running but use third and higher lags of brand awareness respectively perceived quality and advertising expendit ures as instruments. Different sample sizes are reported for the DGMM and SGMM estimators. Sample size is not a well-de? ned concept in SGMM since this estimator essentially runs on two different samples simultaneously. The xtabond2 routine in STATA reports the size of the transformed sample for DGMM and of the untransformed sample for SGMM. 222 Table 5 Perceived quality FE 0. 391*** (0. 0611) 0. 659*** (0. 204) 1. 47*** (0. 0459) 0. 981*** (0. 0431) DGMM SGMM Objective quality Brand awareness POLS Lagged perceived quality 0. 970*** (0. 0110) Brand awareness Advertising Advertising2 0. 000218** (0. 0000952) ? 0. 000000133 (0. 000000107) 0. 0000822 (0. 000198) 0. 0000000408 (0. 000000162) ?0. 0000195 (0. 000969) 0. 000000108 (0. 000000945) 0. 0000219 (0. 000205) 0. 0000000571 (0. 000000231) 0. 0000649 (0. 000944) 0. 0000000807 (0. 00000308) 0. 937*** (0. 0413) 0. 00596*** (0. 00165) ? 0. 000298 (0. 000256) 0. 000000319 (0. 000000267) Marginal effect of advertising at: Mean 25th pctl. 50th pctl. 75th pctl. 0. 0002** (0. 0000819) 0. 000215** (0. 000933) 0. 000211** (0. 00009) 0. 0001965** (0. 0000793) Do not reject Do not reject Reject*** Do not reject Do not reject Do not reject Reject** Reject** Reject*** Do not reject 0. 0000877 (0. 000180) 0. 000083 (0. 000195) 0. 0000844 (0. 000191) 0. 0000887 (0. 000177) ?5. 13e? 06 (0. 000848) ? 0. 0000174 (0. 000952) ? 0. 0000139 (0. 000922) ? 2. 32e? 06 (0. 000825) 0. 0000295 (0. 000176) 0. 0000230 (0. 000201) 0. 0000249 (0. 000194) 0. 0000310 (0. 000170) 0. 0000594 (0. 000740) 0. 0000642 (0. 000917) 0. 0000623 (0. 000847) 0. 0000588 (0. 000714) Do not reject Do not reject Do not reject Reject*** Do not reject ?0. 000256 (0. 000222) ? 0. 00292 (0. 000251) ? 0. 000282 (0. 000242) ? 0. 000248 (0. 000215) Do not reject Reject** Do not reject Reject*** Do not reject Advertising test: ? 1 = ? 2 = 0 Speci? cation tests: Hansen J Difference-in-Hansen J Arellano & Bond AR(2) Arellano & Bond AR(3) Goodness of ? t measures: R2 -wi thin R2 -between R2 # obs # brands 0. 180 0. 952 0. 909 1,148 317 819 274 1,148 317 Reject** 0. 914 1,148 317 604 178 1,148 317 C. R. Clark et al. Standard errors in parenthesis. SGMM estimates in columns labeled â€Å"Objective quality† and â€Å"Brand awareness† * p = 0. 10; ** p = 0. 05; *** p = 0. 01 Effect of advertising on brand awareness and perceived quality 23 Regardless of the class of estimator we ? nd a signi? cant positive effect of advertising expenditures on brand awareness. With the FE estimator we ? nd that the marginal effect of advertising on awareness at the mean is 0. 00668. It is borderline signi? cant with a p-value of 0. 105 and implies an elasticity of 0. 00638 (with a standard error of 0. 00392). A one-standard-deviation increase of advertising expenditures increase brand awareness by 0. 0408 standard deviations (with a standard error of 0. 0251). The rate of depreciation of a brand’s stock of awareness is estimated to be 1–0. 22 3 or 78% per year.The FE estimator identi? es the effect of advertising expenditures on brand awareness solely from the within-brand across-time variation. The problem with this estimator is that it does not deal with the endogeneity of the lagged dependent variable on the right-hand side of Eq. 2 and the potential endogeneity of advertising expenditures. We thus turn to the GMM estimators described in Section 3. We focus on the more ef? cient SGMM estimator. The coef? cient on the linear term in advertising expenditures is estimated to be 0. 00627 ( p-value 0. 037) and the coef? cient on the quadratic term is estimated to be ? . 00000524 ( p-value 0. 028). These estimates support the hypothesis that the relationship between advertising and awareness is nonlinear. The marginal effect of advertising on awareness is estimated to be 0. 00558 ( p-value 0. 038) at the mean and implies an elasticity of 0. 00533 (with a standard error of 0. 00257). A one-standard-deviation increase of adve rtising expenditures increases brand awareness by 0. 0340 standard deviations (with a standard error of 0. 0164). The rate of depreciation decreases substantially after correcting for endogeneity and is estimated to be 1? . 828 or 17% per year, thus indicating that an increase in a brand’s stock of awareness due to an increase in advertising expenditures persists for years to come. The Hansen J test for overidentifying restrictions indicates that the instruments taken together as a group are valid. Recall from Section 3 that we must assume that an extra condition holds in order for the SGMM estimator to be appropriate. The difference-in-Hansen J test con? rms that it does, as we cannot reject the null hypothesis that the additional instruments for the level equations are valid.While we reject the hypothesis of no second-order serial correlation in the error terms, we cannot reject the hypothesis of no thirdorder serial correlation. This result further validates our instrument ing strategy. However, one may still be worried about the SGMM estimates because DGMM uses a strict subset of the orthogonality conditions of SGMM and we reject the Hansen J test for the DGMM estimates (see Table 4). From a formal statistical point of view, rejecting the smaller set of orthogonality conditions in DGMM is not conclusive evidence that the larger set of orthogonality conditions in SGMM are invalid (Hayashi 2000, pp. 18–221). In Fig. 2 we plot the marginal effect of advertising expenditures on brand awareness over the entire range of advertising expenditures for our SGMM estimates along with a histogram of advertising expenditures. For advertising expenditures between $400 million and $800 million per year the marginal effect of advertising on awareness is no longer signi? cantly different from zero 224 C. R. Clark et al. Marginal effect –. 004 0 . 004 0 200 400 600 800 1000 Advertising expenditures (millions of $) 1200 1400 arginal effect of advertising l ower 90% confidence limit . 015 upper 90% confidence limit 0 0 .005 Density . 01 200 400 600 800 1000 Advertising expenditures (millions of $) 1200 1400  ® Fig. 2 Pointwise con? dence interval for the marginal effect of advertising expenditures on brand awareness (upper panel) and histogram of advertising expenditures (lower panel). SGMM estimates and, statistically, it is actually negative for very high advertising expenditures over $800 million per year. The former case covers around 1. 9% of observations and the latter less than 0. 5%.One possible interpretation is that brands with very high current advertising expenditures are those that are already wellknown (perhaps because they have been heavily advertised over the years), so that advertising cannot further boost their awareness. Indeed, average awareness for observations with over $400 million in advertising expenditures is 74. 94 as compared to 69. 35 for the entire sample. Turning from brand awareness in Table 4 to perce ived quality in Table 5, we see that the positive effect of advertising expenditures on perceived quality found by the POLS estimator disappears once unobserved eterogeneity is accounted by the FE, DGMM, and SGMM estimators. In fact, we cannot reject the null hypothesis that advertising plays no role in determining perceived quality. Figure 3 graphically illustrates the absence of an effect of advertising expenditures on perceived quality at the margin for our DGMM estimates. While the effect of advertising expenditures on perceived quality is very imprecisely estimated, it appears to be economically insigni? cant: The implied elasticity is ? 0. 0000534 (with a standard error of 0. 00883) and a one-standarddeviation increase of advertising expenditures decrease perceived quality byEffect of advertising on brand awareness and perceived quality 225 Marginal effect –. 001 0 . 001 0 200 400 600 800 1000 Advertising expenditures (millions of $) 1200 1400 marginal effect of adverti sing lower 90% confidence limit . 015 upper 90% confidence limit 0 0 Density . 005 . 01 200 400 600 800 1000 Advertising expenditures (millions of $) 1200 1400  ® Fig. 3 Pointwise con? dence interval for the marginal effect of advertising expenditures on perceived quality (upper panel) and histogram of advertising expenditures (lower panel). DGMM estimates 0. 000869 standard deviations (with a standard error of 0. 44). Note that the comparable effects for brand awareness are two orders of magnitude larger. Much of the remainder of this paper is concerned with demonstrating the robustness of this negative result. Before proceeding we note that whenever possible we focus on the more ef? cient SGMM estimator. Unfortunately, for perceived quality in many cases, including that in the fourth column of Table 5, the difference-in-Hansen J test rejects the null hypothesis that the extra moments in the SGMM estimator are valid. In these cases we focus on the DGMM estimator. 5. Objective and perceived quality An important component of a brand’s perceived quality is its objective quality. To the extent that objective quality remains constant, it is absorbed into the brand effects. But, even though the time frame of our sample is not very long, it is certainly possible that the objective quality of some brands has changed over the course of our sample. If so, then the lack of an effect of advertising expenditures on perceived quality may be explained if brand managers increase advertising expenditures to compensate for decreases in objective 26 C. R. Clark et al. quality. To the extent that increased advertising expenditures and decreased objective quality cancel each other out, their net effect on perceived quality may be zero. The dif? culty with testing this alternative explanation is that we do not have data on objective quality. We therefore exclude from the analysis those categories with brands that are likely to undergo changes in objective quality (applian ces, automobiles, computers, consumer electronics, fast food, footwear, pharmaceutical OTC, telecommunications, toys, and travel).The resulting estimates are reported in Table 5 under the heading â€Å"Objective quality. † We still ? nd no effect of advertising expenditures on perceived quality. 8 5. 2 Variation in perceived quality Another possible reason for the lack of an effect of advertising expenditures on perceived quality is that perceived quality may not vary much over time. This is not the case in our data. Indeed, the standard deviation of the year-to-year changes in perceived quality is 0. 2154. Even for those products whose objective quality does not change over time there are important changes in perceived quality (standard deviation 0. 130). For example, consider bottled water where we expect little change in objective quality over time, both within and across brands. Nonetheless, there is considerable variation in perceived quality. The perceived quality of Aq ua? na Water ranges across years from 6. 33 to 6. 90 and that of Poland Spring Water from 5. 91 to 6. 43, so the equivalent of over two standard deviations. Across the brands of bottled water the range is from 5. 88 to 6. 90, or the equivalent of over four standard deviations. Further evidence of variation in perceived quality is provided by the automobiles category.Here we have obtained measures of objective quality from Consumer Reports that rate vehicles based on their performance, comfort, convenience, safety, and fuel economy. We can ? nd examples of brands whose objective quality does not change at least for a number of years while their perceived quality ? uctuates considerably. For example, Chevy Silverado’s objective quality does not change between 2000 and 2002, but its perceived quality increases from 6. 08 to 6. 71 over these three years. Similarly, GMC Sierra’s objective quality does not change between 2001 and 2003, but its perceived quality decreases fro m 6. 72 to 6. 26. The ? al piece of evidence that we have to offer is the variance decomposition from Section 4 (see again Table 3 and Fig. 1). Recall that the acrossbrands standard deviation of brand awareness is about six times larger than the within-brand standard deviation. In case of perceived quality the ratio is about 4. Hence, while there is more cross-sectional than time-series variation in our sample, the time-series variation is substantial for both brand aware- 8 The marginal effects are calculated at the mean, 25th, 50th, and 75th percentile for advertising for the brands in the categories judged to be stable in terms of objective quality over time.Effect of advertising on brand awareness and perceived quality 227 ness and perceived quality. Also recall from Section 4 that perceived quality with an intertemporal correlation of 0. 95 is somewhat less persistent than brand awareness with an intertemporal correlation of 0. 98. Given that we are able to detect an effect of advertising expenditures on brand awareness, it seems unlikely that insuf? cient variation within brands can explain the lack of an effect of advertising expenditures on perceived quality; instead, our results suggest that the variation in perceived quality is unrelated to advertising expenditures.The question then becomes what besides advertising may drive these changes in perceived quality. There are numerous possibilities, including consumer learning and word-of-mouth effects. Unfortunately, given the data available to us, we cannot further explore these possibilities. 5. 3 Brand awareness and perceived quality Another concern is that consumers may confound awareness and preference. That is, consumers may simply prefer more familiar brands over less familiar ones (see Zajonc 1968). To address this issue we proxy for consumers’ familiarity by adding brand awareness to the regression for perceived quality.The resulting estimates are reported in Table 5 under the heading â₠¬Å"Brand awareness. † While there is a signi? cant positive relationship between brand awareness and perceived quality, there is still no evidence of a signi? cant positive effect of advertising expenditures on perceived quality. 5. 4 Competitive effects Advertising takes place in a competitive environment. Most of the industries being studied here are indeed oligopolies, which suggests that strategic considerations may in? uence advertising decisions.We next allow a brand’s stocks of awareness and perceived quality to be affected by the advertising of its competitors as discussed in Section 2. 9 Competitors’ advertising, in turn, can enter our estimation Eqs. 1 and 2 either relative in the share-of-voice speci? cation or absolute in the total-advertising speci? cation. We report the resulting estimates in Table 6. Somewhat surprisingly, the share-of-voice speci? cation yields an insignificant effect of own advertising. We conclude that the share-of-voice speci? cation is simply not an appropriate functional form in our application. The total-advertising speci? ation readily con? rms our main ? ndings presented above that own advertising affects brand awareness but not perceived quality. This is true even if we allow competitors’ advertising to enter quadratically in 9 For this analysis we take the subcategory rather than the category as the relevant competitive environment. Consider for instance the beer, wine, liquor category. There is no reason to expect the advertising expenditures of beer brands to affect the perceived quality or awareness of liquor brands. We drop any subcategory in any year where there is just one brand due to the lack of competitors.Table 6 Competitive effects Perceived quality 0. 845*** (0. 0217) 0. 356** (0. 145) Total advertising Brand awareness Perceived quality 228 Share of voice Brand awareness Lagged awareness/quality Relative advertising (Relative advertising)2 0. 872*** (0. 0348) 0. 236 (0. 170) ? 0. 00912 (0. 0104) 1. 068*** (0. 0406) 0. 0168 (0. 0164) ? 0. 00102 (0. 00132) Advertising Advertising2 Competitors’ advertising 0. 00892** (0. 00387) ? 0. 00000602** (0. 00000248) ? 0. 00609* (0. 00363) ?0. 0000180 (0. 000592) ? 0. 0000000303 (0. 000000535) 0. 00128** (0. 000515) Marginal effect of advertising at: Mean 5th pctl. 50th pctl. 75th pctl. 0. 00333 (0. 00239) 0. 0164 (0. 01218) 0. 00624 (0. 00448) 0. 00264 (0. 00190) Do not reject Reject* Do not reject Reject*** Do not reject 1,147 317 0. 000225 (0. 000218) 0. 00113 (0. 00110) 0. 00429 (0. 000416) 0. 000179 (0. 000173) 0. 00812** (0. 00355) 0. 00881** (0. 00382) 0. 00861** (0. 00375) 0. 00797** (0. 00349) Reject** Do not reject Do not reject Reject** Do not reject 1,147 317 ?0. 000140 (0. 000524) ? 0. 0000174 (0. 000582) ? 0. 0000164 (0. 000565) ? 0. 0000132 (0. 000510) Do not reject Do not reject Reject*** Do not reject 1,147 317 C. R. Clark et al.Advertising test: ? 1 = ? 2 = 0 Speci? cation tests: Hansen J Differ ence-in-Hansen J Arellano & Bond AR(2) Arellano & Bond AR(3) # obs # brands Do not reject Do not reject Do not reject Reject** Do not reject 1,147 317 Standard errors in parenthesis. DGMM estimates in column labeled â€Å"Total advertising/perceived quality† and SGMM estimates otherwise * p = 0. 10; ** p = 0. 05; *** p = 0. 01 Effect of advertising on brand awareness and perceived quality 229 addition to linearly. Competitors’ advertising has a signi? cant negative effect on brand awareness and a signi? cant positive effect on perceived quality.Repeating the analysis using the sum instead of the average of competitors’ advertising yields largely similar results except that the share-of-voice speci? cation yields a signi? cant negative effect of advertising on brand awareness, thereby reinforcing our conclusion that this is not an appropriate functional form. 10 Overall, the inclusion of competitors’ advertising does not seem to in? uence our results about the role of own advertising on brand awareness and perceived quality. This justi? es our focus on the simple model without competition. Moreover, it suggests that the following alternative explanation for our main ? dings presented above is unlikely. Suppose awareness depended positively on the total amount of advertising in the brand’s subcategory or category while perceived quality depended positively on the brand’s own advertising but negatively on competitors’ advertising. Then the results from the simple model without competition could be driven by an omitted variables problem: If the brand’s own advertising is highly correlated with competitors’ advertising, then we would overstate the impact of advertising on awareness and understate the impact on perceived quality.In fact, we might ? nd no impact of advertising on perceived quality at all if the brand’s own advertising and competitors’ advertising cancel each other out. 5. 5 Category-speci? c effects Perhaps the ideal data for analyzing the effect of advertising are time series of advertising expenditures, brand awareness, and perceived quality for the brands being studied. With long enough time series we could then try to identify for each brand in isolation the effect of advertising expenditures on brand awareness and perceived quality.Since such time series are unfortunately not available, we have focused so far on the aggregate effect of advertising expenditures on brand awareness and perceived quality, i. e. , we have constrained the slope parameters in Eqs. 1 and 2 that determine the effect of advertising to be the same across brands. Similarly, we have constrained the carryover parameters in Eqs. 1 and 2 that determine the effect of lagged perceived quality and brand awareness respectively to be the same across brands. As a compromise between the two extremes of brands in isolation versus all brands aggregated, we ? st examine the effect of adver tising in different categories. This adds some cross-sectional variation across the brands within a 10 We caution the reader against reading too much into these results: The number and identity of the brands within a subcategory or category varies sometimes widely from year to year in the Brandweek Superbrands surveys. Thus, the sum of competitors’ advertising is an extremely volatile measure of the competitive environment. Moreover, the number of brands varies from 3 for some subcategories to 10 for others, thus making the sum of competitors’ advertising dif? ult to compare across subcategories. 230 Table 7 Category-speci? c effects Brand awareness Marginal effect Carryover rate Appliances Automobiles Beer, wine, liquor Beverages Computers Consumer electronics Cosmetics and fragrances Credit cards Fast food Food Footwear Health and beauty Household Petrol Pharmaceutical OTC Pharmaceutical prescription Telecommunications Toys Travel 0. 0233 (0. 0167) 0. 00526 (0. 0154) ? 0. 0264 (0. 0423) ? 0. 0245 (0. 0554) 0. 0193** (0. 00777) 0. 0210** (0. 0

An Utopian Society

Utopian society where all your needs are taken care of by someone else sounds wonderful to many people. In a socialist society, everyone is taken care of, given a job, and the government handles the â€Å"business end† of things. Capitalism, on the other hand, is a very different society model where citizens are pushed to success by their own merit, production and prices are based on supply and demand, and business models are efficient. This sounds like a lot of work, but is better in the long run. While Socialism has some benefits, Capitalism is a greater system of society as it allows citizens more control in their own society. Most importantly, capitalism pushes citizens to create their own wealth through competition. You are what you choose to be. If you wish to own a business, you can. If you desire to make more money, you can. If you desire to gain further education or training to get out of a low level job, you can. In a capitalistic society, those who work hard move ahead. Those who desire to push themselves will reap the benefits they, themselves, have sown. In a socialist society, everyone works for the greater good. Even if it's not a particularly important job, you have one. The main idea behind socialism is equality – to lessen the gap between rich and poor. Then, some may say, that because of the competition-based mentality of capitalism, it creates an equality gap. This is true, there is a huge gap between those who are extremely successful and those who are barely scraping by. However, those at the bottom have the opportunity to become better – if they desire and have the drive to do so. Secondly, the two society models differ in who controls production of goods. In a socialist society, the government controls production of goods and also implements price controls. Because of this, you either pay the price for the item or do without – there is no searching for a lower price at a competitor. Again, it's the idea of being equal and fair. In a capitalistic society, production of goods is done by private businesses, not the government. Therefore, production of goods and their costs are based on a supply and demand system. This creates a greater possibility of wealth because if you produce a good product at a fair price, people will buy it. A downside that can arise in a capitalistic society is that of monopolies in business. To that we can refer back to the first idea of striving to be better (than your competitor). If there is a company that makes a product and they have a corner on the market that you're not happy with, simply create a better product or one at a better price. The opportunity is there for you to achieve in a capitalistic society. Lastly, since socialism and capitalism differ in how they produce goods, there is also a different mentality behind their production process. Capitalism is concerned with making the most profit, so business models are more efficient than those in a socialist society that are run by the government. Businesses in a capitalistic market are concerned with making as much profit as possible. Therefore, they will streamline their business practices so that they can produce the best product possible for the lowest price in order to increase their profit. Oftentimes in socialist societies, where the government controls production, there are no incentives to streamline business. You make the same amount of money, whether it takes you two days to create a product or a week. Some may say that the hunt for the almighty dollar in a capitalistic society causes businesses to cut corners or do sloppy work. This can certainly happen, however that business will find that their consumer base disappears if they are producing less than quality work. Which again, pushes us back to the first point of competition in a capitalist society. In the end, while socialism sounds like an idealistic society in which no one is poor, everyone has a job, and food in their stomachs, one will find there are many flaws to the system. Instead, a society based on capitalism is a far superior model because it creates a culture of competition to succeed and achieve, allows companies to create products based on demand and prices based on supply, and lastly keeps businesses streamlined and efficient. While there are obvious possible downfalls to this type of society, it is still a superior option to a society in which you are told what you will be, have no opportunities to change that, and everything is controlled by the government.

Strategic Quality Planning

123 Strategic Quality Planning Quality is strategic. This may seem somewhat obvious, but the actions of Companies implementing quality measures oftenobscure this fact. This is especially true when a comNpany is in a reactive mode and does notjise effective planning. In this chapter we discuss iinportant aspeets of strategic quality planning. Strategic planning has two important dimensions: content and pro ess. Strategy content answers the question of what is to be contained in the strategic plan. Mw consists of the steps used to develop the strategy.In this chapter we first discuss content and then process. Finally, we look at quality results and whether quality has been shown to yield bottornlme results along the supply chain. STRATEGY CONTENT Why is quality planning important? As we have discussed in previous chapters, quality improveY ment is a planned managerial activity. As shown in this Chapter, quality improvement involves identifying potential improvements, prioritizing poten tial areas for improvement, and planning the implementation of projects and improvements.What are the content variables that should be included in strategic quality planning? Among the variables we discuss are time, leadership, quality costs, generic strategies (cost, differentiation, and focus), order Winners, and quality as a core Competency. These content variables outline key considerations when developing a strategic plan. These considerations are either explicitly or implicitly addressed in the strategic planning processes discussed later in the chapterA THE IMPORTANCE OF TIME IN QUALITY IMPROVEMENTWe discuss two aspect of time: the time it takes to business goals as a result of quality and the at which companies improve. Real-life experience shows that time is a key variable in improving quality. Amajor study of best quality-related practices undertaken by Ernst and Young2 was critical of total quality management – ATQM ro rams for not rovidin bottom-line results. At t he same time, the Ernst Vldeo Chp. P g P g Mission at the Ritz and Young study advocated the implementation of TQM. A comprehensive . 17† @E 1 Garvin, D. , Operations Strategy (Englewood Cliffs, Prentice Hall, 1992)4

Three sides of abortion debate Essay Example | Topics and Well Written Essays - 500 words

Three sides of abortion debate - Essay Example The legal right of a woman to undergo an abortion has not resolved many ethical issues that surround the procedure of abortion (Fry, Veatch and Taylor, 2010). There are three stances people have on abortion include pro-abortion, middle ground that abortion can be accepted, and anti-abortion, and the arguments for these stands are discussed. There are individuals who support abortion on the basis that it is not wrong, and does not need the involvement of undesirable consequences. To look at this argument in another way, it tends to neglect the rights of the fetus or even acknowledge the fetus as a person. There are individuals who consider abortion as the right of a woman hence she is solely liable to the way she controls her body. Moralists who take part in judging actions argue that abortion is simply a deliberate failure to conceive a child, and with availability of contraceptives in mind, abortion should be too. By contrast, there are those who think that the fetus being a person, has limited rights that has no significant weight on the interests of the people already born who include the parents and children of that particular family. All the same, people supporting abortion do so on the fact that the overwhelming principle behind abortion is the woman and her rights to choose what to happen to her body.

Le Corbusier and Modernism Essay Example | Topics and Well Written Essays - 500 words

Le Corbusier and Modernism - Essay Example Le Corbusier coined the modernism of architecture in Europe by introducing a utopian vision for the current society only to experience different opinions from residents of his buildings. Urbanism is a key strategy, which Le Corbusier adopted in the process of supporting modern architecture. For example, when the French was unable to handle the issue of the increase in the number of Parisian slums, Le Corbusier focused on developing effective ways of housing several people as a key response strategy towards increase in the urban housing crisis (Vrahimis 75). His believe was that the modern architectural forms would contribute in providing quality life for the lower class individuals in society. The 1922 Immeubles Villas depicts one of his structures, which had several large blocks stack in a cell-like manner for individual apartments in plans of a kitchen, bedrooms, living room and garden terrace (Betsky 95). Le Corbusier also focused on urbanizing the entire cities with modern architectural forms, which transformed the societies into higher economic levels while enjoying high standards and efficient environments. During the industrialization process, Le Corbusier contributed scholarly by advocating for modernization of the society. This was in the journal L’Esprit Nouveau where Le Corbusier claims that there was a need to have a social transformation, which would ensure that the environment in society was efficient. He claimed that transformation would overcome the revolution spectre, which would contribute in the attainment of a shake society (Evenson 7). However, Le Corbusier has received several criticisms on his idea for modernity in architecture. Such are based on the variance of the architectural values and the associated aspects, which create differences in modern architecture. Some critics, such as Lewis Mumford argued that skyscrapers that were the work of Le Corbusier existed because of technological possibilities, but not any

History before 1877 Essay Example | Topics and Well Written Essays - 1250 words

History before 1877 - Essay Example Slaves who bore no rights were in high demand to provide for cheap labor. A large wave of Europeans immigrated to the United States of America in the 19th century (Wolff 56). The famous Potato famine in Ireland was also another factor that pushed these groups to migrate to the United States for greener pastures. Due to the economic depression accompanied by religious intolerance in Germany, many Catholics were obliged to migrate (Chang 124). The immigration of Europeans to the United States was of great benefit it spurred economic growth. To start with, due to rapid industrialization, there was the need for cheap labor. Second, the United States began claiming land from the Spanish and the Northern America native people. Nevertheless, the populous immigration was a threat to certain groups of people as it was deemed to tamper with the peace and harmony of the citizens (Herron 307). Europeans remarkably made up the majority of migrants during the end of the twentieth century. However, this changed in the late twentieth century, when they were replaced by migrants from Latin America and Asia (Chang, 411). A bulk of them came from Mexico, Philippines, China, Vietnam, Korean, India, and the Dominican Republic. Population growth and industrialization are the convulsive demographic and economic factors that attracted migrants to America: the land of opportunity and freedom (Chang, 411). Immigrants in the past and present have contributed to the American economy in different perspectives. However, it is evident that they have played a critical role in shaping the destiny of the country. No doubt, America will continue to grow, demand and attract the strong willing unskilled laborers for many years to come (Chang, 411). With increased numbers of immigrants between 1860 and 1915, conflict arose due to competition for resources. It became necessary to regulate the

Americas Best Colleges Essay Example | Topics and Well Written Essays - 500 words

Americas Best Colleges - Essay Example Aside from knowing the importance of choosing a reputable school, as an Economics major, I know that competition has become extremely great nowadays. The Information Age further intensifies competition to the next level, making it fiercer and tougher. The invention of the Internet has opened up numerous opportunities that I believe can be maximized only by those who have prepared well and decided to take up the more courageous and more exciting path. As a foreigner, at first I thought that by just studying in any school in the United States could already give me an edge that will secure my future success in my chosen career. With that burning desire, I struggled before to enroll in an American college. Fortunately, my efforts turned out to be fruitful. I successfully became a student of Fisher College here in Boston. But as I moved on as a student in that university, I realized that there are greater opportunities for academic growth outside it. As I become more familiar with the American school system, there was still a desire in my heart to get quality education that I need to further improve my future success. I also realized that the name and the reputation of the school really matter. This pushed me to research on the Internet on America's top universities that are found in or near Boston. On surfing the US News web site, I came across the name of Boston University Knowin

Can the Gulf Cooperation Council (GCC) emulate the model of the EU Essay

Can the Gulf Cooperation Council (GCC) emulate the model of the EU - Essay Example Despite this noticeable difference between the EU and the GCC, the former can still share its experience on enhancing the performance of regional agencies, managing the adjustment costs created by reducing barriers, and achieving integration, with the Arab world. The Arab and European countries meeting correspondingly in the Gulf Cooperation Council (GCC) and the European Union (EU), while having crucial political and strategic commonalities, have generated markedly different wide-ranging pattern of strategic relations and issues in the last two to three decades.1 Both have particular interests in their corresponding region, on the one hand, and tremendously important global alliances, on the other. Nevertheless, it is unquestionable that the GCC countries have progressed globally more than the EU, particularly on political status, whilst the EU has concentrated on its region and organised its regional structure far more radically than the GCC.2 Ultimately, whilst both the EU and the GCC countries have a critical, but distinct security and political relations with the United States, the latter are at present basically directed towards Asia from a strategic framework, whilst the EU is directed towards its own region and North America3, with t he GCC serving an absolutely more isolated role. Nevertheless, argument for the EU as an exemplar for other regional integration contexts could be restricted, given the distinctive conditions in which it was built and endorsed. Founded due to conflicts, the EU gained from particular events in its expansion, such as the developed character of the European economies, the United States pledge and fostering role, and the Cold War, which are not located anywhere else.4 It would hence appear more relevant to apply the experience of EU not as a blueprint or paradigm to evaluate the failure or success of the GCC regional integration

Recreation centre Research Paper Example | Topics and Well Written Essays - 2750 words

Recreation centre - Research Paper Example Twenty permanent staff; twenty to fifty contractual, and ten young volunteers who take turns in guiding and informing the users of the proper use of the environment. Distinction is emphasized between staff and employees on one hand, and local volunteers on the other. Volunteers are accorded guest status, i.e. with some privileges. The XYZ Ecotourism aims to provide outdoor recreation site for local residents and tourists with amenities for picnicking, hiking, bush walking, and other similar outdoor activities. It encourages weekend recreation/retreat for local residents and tourists who temporarily seek refuge from the hassles of urban life. XYZ Ecotourism was conceived some months ago during a group outdoor get-together by well-minded individuals, businessmen with previous acquaintances, who saw a flourishing ecotourism business in Albury, New South Wales, Australia. They were also impressed by the concern of local residents in the area who took turns in caring for their environment, and promoting green tourism among local businesses and small entrepreneurs in the community. With firm determination, the businessmen - five in number - who now comprise the majority of the stockholders bonded together and slowly transformed the once uninhabited and underdeveloped area in the outskirts into a flourishing ecotourism destination to feature an outdoor recreation in a natural setting. The recreation site provides a venue for people to escape - i.e. temporarily - from the rigors and stress of urban life, and to engage in a predominant recreational pastime of picnicking in a natural setting with the amenities of modern facilities and new technology. The site also provides a peaceful retreat for passive pursuits as well as opportunity for more active endeavors such as jogging, walking, hiking, bush walking, etc. 3. Summary of Objectives and Timelines 3.1 To provide an outdoor recreation or an ecotourism destination, conveniently situated near urban centers in Alsbury, New South Wales; 3.2 To produce an approximate number of picnic areas, with parking spaces, roads, paths, most of which are still to be constructed. The target maximum picnic areas is twenty, but can be expanded, considering the large area the facility provides. At present, the company has provided ten picnic areas located within a one kilometer radius, and within a short range from the Admin/Office. The main road is 95% complete, while some access roads are still being constructed; paths and trails are also provided, but still incomplete. These are the requirements for the picnic areas: tables in open spaces with scattered trees tables near parking areas facilities with a view of water, grassed areas with shades acceptable for grass picnicking flat or minimal sloping ground essential facilities: shelter, water, toilet block,

When I came to the USA Essay Example | Topics and Well Written Essays - 1250 words

When I came to the USA - Essay Example Without a doubt, it was a challenge for me as I had to assimilate. As a kid growing up in my home country, I was an average kids who loved to play sports and tried hard in school. However when my parents decided to come to America, the transition was without a doubt difficult. I had to adapt to a new language, new customs, and a whole new culture. Yet, I never gave up I came from an environment where things were conservative. When my brother and I arrived to the U.S.A we were very tired. Our journey was so long and in midst of coming to USA, we did not even have a last proper meal. You can imagine the anxiety, sadness and yet excitement in our hearts. It was a chaotic moment where I had mixed notions. Finally, we landed in the airport as the flight was really long. I could not sleep in the airplane because of the loud humming noise of the engine. Additionally, I was too anxious to land to America, which added to my anxiety. Finally, we landed and got a taxi to a nearby town where we would settle. The neighborhood was close to our school, as that was our main priority. After we reached the new town, we decided to settle in a hotel.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     We were looking for a place to stay for almost 3 hours, I was really tired that my feet were trembling and I could not stand up anymore. Finally, we found a room in a hotel, but we werent comfortable. The hotel was terrible because there was a distinct smell. We knew it was not a top hotel due to our budget constraints. Also, it was really dark that we could not see the end of the lobby. A few minutes after looking around, we decided to take the room my brother asked," do you want to stay to night in this hotel? "And I said, "I do not feel comfortable." As soon as I finished my sentence, my brother understood what I was feeling and at once canceled the reservation. We continued looking for a room and we found one, that better than the first one. We took that room for a couple days. At that time, we also were

Fianal paper paragraph Thesis Example | Topics and Well Written Essays - 500 words - 1

Fianal paper paragraph - Thesis Example The film reveals how the Japanese people remained unemotional and focused to build their nation. The film is not political and gruesome. This study intends to dig deep into the cultural and social background of the Japanese people and how the pattern aid in fostering unity and harmony especially during and after a crisis. The second film Osaka Elegy is a representation of the real picture of Japanese aspects of responsibility and irresponsibility. This paper intends to examine the aspect of responsibility as well as the aftermath of irresponsibility as it is depicted in the film Osaka Elegy. The director Kenji Mizoguchi reveals how the young woman Asai tries to refuse the advances made by her boss at the pharmaceutical company. It emerges that the young woman represents the responsible Japanese women, who believes in moral actions. Asai’s father‘s drinking habits, which has put the family in a deplorable financial situations represents irresponsibility. It is notable that, the irresponsibility has compelled Asai to work and sustain her brother in school. In addition, Asai has tried to settle many of her father’s debts. However, Asai’s weakness and irresponsibility is indicated when she joins prostitution to sustain the family needs. She is finally arrested and

Representation of Women in History Essay Example for Free

Representation of Women in History Essay Throughout American history, women have been the backbone of the country, working at taking care of their families, and the country itself. The recognition of this is shown by the different representations of America in a female context. Whether as a insolent young Native American princess who has wronged her British mother, or as Roman goddess Columbia in her long, flowing white robes.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The major change in the way America was represented pictorially was brought about by Phillis Wheatley in 1775, when she sent her poem to George Washington describing America as a goddess called Columbia. The people at the time were quick to identify with this new interpretation as they wanted to distance themselves from the negative British representations of America as a Native American woman who was young and disobeying of her parental figure. Also at that time, colonists were thinking of America as a place of self-knowledge and exploration, creating libraries and other places of study, complete with mock Roman architecture that enforced the feeling of the â€Å"new Rome,† and they liked the fact that Columbia was shown as a Roman goddess of sorts.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   When looking at the differences in the print by Edward Savage and the print dated 1866, there can be seen a change from Savages peaceful looking goddess Columbia, and then the armed fighting women that are in the 1866 picture. The earlier picture dated as 1796 shows Liberty wearing a wreath of flowers around her, offering a cup to an eagle and surrounded by billowing clouds and showing her upfront, away from any violence. The latter drawing from 1866 shows three women, two holding the flag pole, and one with a sword still fighting, surrounded by people. This picture comes at the end of the Revolution era, and depicts Americas fighting spirit which has emerged from the battle.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   When looking at the example of the Eighteenth century book, Charlotte Temple by Susanna Rowson, the influence of the Columbian ideal can be shown by the book being of the seduction genre, which was very popular in that era. This type of story touched many in the nation, as people related their worrying about how they stood after going against Britain to the seduction of a young female who was brought the new land, and then tricked into getting pregnant, only to be left to die on her own. Many wondered would America suffer that same fate as the seduced young woman, or would the country triumph as the new goddess, Columbia. It is no surprise that during such a perilous time in history that people were drawn to these seduction genre stories to the point of believing in their hearts that Rowsons work was non-fiction, which is wasnt.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The recent 2005 portrait of Sacajawea is a new drawing on a golden dollar coin. She is shown as looking back, her hair drawn back, and having her son, Jean Baptiste strapped to her. This representation of her is striking with her large, dark eyes, and her true Native American features which are very pronounced and stunning. In earlier representations of Native American women, the facial features are all very close to what the features of drawings of white women at the time. These earlier images were closer to the facial likeness of early pictures of Columbia.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The United States mint clearly made this coin to represent the anniversary of the Lewis and Clark expedition, dated 1804. The recent golden dollar was dated 2005, which means that it was conceived of and based on a 2004 date, exactly 200 years apart. The coin is also meant to commemorate the Native American people themselves in history.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The representation of Columbia in American history can be seen as the evolution of the country itself. As society grew, and the perception of what it meant to be an American changed, the figures of women changed with it. The spirit of Columbia is equated with the spirit of our nation, and the artistry used to show that spirit in female form is still being used today, represented by the Sacajawea coin, celebrating the community ideal of what is is to be American.

Holistic Development of a Child

Holistic Development of a Child Understanding how children develop is an important obligation for all those who work in early years practise. Practitioners need to develop an understanding of the implications of childrens developmental processes in order to meet individual needs. The key to this understanding is the development of skills in observing children and of interpreting those observations. Throughout the observations the aim is to compare their abilities to the norms of a child their age and to compare and analyse the results against what child development theorists have understood through relevant reading and understanding gained from experiences, also to explain how the characteristics of the child and features of his/her environment may interact to influence growth and development. A holistic approach to child development seeks to simultaneously address the physical, emotional, relational, intellectual, and spiritual aspects of a childs life. The importance of the Holistic Approach is that it Children learn different things at different stages, e.g. walking, talking, fine motor skills etc. Holistic development is the overall development of all areas of development in children. There are many proven techniques used in observing children. Depending on the reason for the observation some methods will relay the information more clearly, the observation that have been taken have been done in the free description written record method, checklists, web diagram. The free description is observed when a specific task is set, appropriate to the age and stage of development of the child. It is a description of an event unfolding face on, written in the present tense so that the reader can appreciate what has happened. The disadvantages are that may not be able to convey everything you see as it happens and sometimes it is difficult to keep up with what is happening and it may produce an unwieldy amount of information this can be seen in Appendix 1. Checklist or developmental guides are often used for assessing a child on one particular day, but can be used over a long period of time. Checklists often highlight areas of a childs development that have previously gone un noticed. For example in Appendix 5, I was able to concentrate closely on what the children were doing and could observe things as they unfolded as I was looking for them. The advantages of the checklist method are that it is a quick way of presenting a great deal of information. The disadvantages are that care must be taken to maintain objectivity. The role of the childcare and educational practitioner in a home placement stays the same as it would in a school or nursery and we still have to abide by the confidentiality policies. The 1989 United Nations Convention on the rights of the child sets out 54 Articles. The Articles that relate particularly to observing children are: Article 12: Children have the right to say what they think should happen when adults are making decisions that affect them, and to have their opinion taken into account. Article 13: Children have the right to receive and to share information, as long as the information is not damaging to them or to others. Article 16: Children have the right to privacy. The law should protect them from attacks against their way of life, their good name, their families and their homes Under the Data protection act 1988 the observations taken will require to comply with the eight data protection principles: to be fairly and lawfully processed, to be processed for limited purposes, to be adequate and relevant and not excessive, to be accurate and finally not kept longer than necessary. The placement setting is in a loving family with both parents present. The mother aged 32 is not working as she is still on maternity leave; the father age 33 works full time Monday to Friday. There are four children in the placement family. Child D the oldest female age 5 attains reception in the school down the road, Child C the middle female child age 3, attains pre-school half a day Monday and Tuesday and stays with a child minder all day Wednesdays. At the end of the placement Child C is attaining pre-school all day Monday and Tuesdays, she also has Hypermobility. The twins Child B and Child A age 6 months on first day of placement. Child B is male and the younger of the twins. Child A is female and also suffers from Hypermobility. The placement is over a period of 4 months in which I shall being observing Child A and Child B. The mothers pregnancy was healthy with no problems. Her first child, Child D she was in labor for 26 hours, the second, Child C it only lasted about 30 minutes, she says I was afraid that I was going to have her down the toilet! The labor for the twins was also very quick only lasting 1 hour. The mother explains that during the beginning of the pregnancy you couldnt even tell I was pregnant and I felt fine but when it came to 28 weeks I got very big and it became very heavy and uncomfortable. She went full term of 39 weeks. Child A weighed 6lbs 10oz and came out head first with no complications. Child B weighed 5lbs 15oz and tried to come out sideways because of the extra round after Child A left, the midwife had to push the baby back and turn it around inside the mothers womb. There was 18 minutes between Child A and Child B. When Child B came out he was black and blue but was breathing but the doctors were unsure whether he would survive because his Apgar score was 3. The very first test given to your newborn, the Apgar score occurs right after your babys birth in the delivery or birthing room. The test was designed to quickly evaluate a newborns physical condition after delivery and to determine any immediate need for extra medical or emergency care. Although the Apgar score was developed in 1952 by an anaesthesiologist named Virginia Apgar, you may have also heard it referred to as an acronym for: Activity, Pulse, Grimace, Appearance, and Respiration. The Apgar test is usually given to your baby twice: once at 1 minute after birth, and again at 5 minutes after birth. Rarely, if there are concerns about the babys condition and the first two scores are low, the test may be scored for a third time at 10 minutes after birth. Five factors are used to evaluate the babys condition and each factor is scored on a scale of 0 to 2, with 2 being the best score: activity and muscle tone pulse (heart rate) grimace response (medically known as reflex irritability) appearance (skin coloration) respiration (breathing rate and effort) Doctors, midwives, or nurses add these five factors together to calculate the Apgar score. Scores obtainable are between 10 and 0, with 10 being the highest possible score. (www.kidshealth.org/parent/newborn/first_days/apgar.html). Children that have a score under 6 rarely survive. The mother believes in a constant routine and that her children behave the way they are because she does not smother them and entertain them when they cry, she encourages them to play by themselves as to establish independence from an early age. She says let the babies cry for a bit and they will sort themselves out. But obviously if the child has hurt themselves or really needs attention she will give them love and care. There are not many socio-economic factors within the family as the children were all planned, although the mother obviously didnt predict twins, she explain thatthey are lucky to be in a position to be able to give their children a happy and healthy lifestyle. During the placement the father got a new job in which he is going to be earning more. The mother explained that they were considering her going back to work but she they want to give stay out of work until the twins are in school. Also during the placement the parents made a very important decision that effects there life forever, they had decided that the father was going to get a vasectomy. They made that decision that they have had the number of children that they want for their family. The mother also gets allot of help from the family as both parent have parent walking distance from the house and the house is always full of family members. Physical development: The different areas of development that the observations will be focused on are- physical development, this is divided into gross motor development, and how children grow and acquire physical skills, from gaining head control to full agility. Fine motor development linked with vision and hand-eye coordination. (Frankel, Hobart, 2004) A childs physical development depends just as much on nurture as it does on nature. On the one hand a child is born with a genetic map that will guide such matters as height and general muscle development but on the other the childs environment will influence overall health and activity levels which contribute to physical development. (http://www.kidsdevelopment.co.uk/EncourageChildsPhysicalDevelopment.html) The developmental norm for a baby aged between Birth to 9 months are: Birth gross motor reflexes rooting, sucking and swallowing reflex. Grasp reflex. Walking reflex. Moro reflex Birth fine motor reflexes pupils reacting to light, open eyes when held upright, blinks or opens eyes wide to sudden sound, startle reaction to sudden sound, closing eyes to sudden bright light. 1 month gross motor reflexes In prone, lifts chine. In supine, head moves from side to side. Arm and leg extended on face side. Begins to flex upper and lower limbs. 1 month fine motor reflexes Hands fisted. Eyes move to dangling objects. 3 months gross motor reflexes Held sitting, head straight, back and neck firm. Lower back still weak. When lying, pelvis is flat. 3 month fine motor reflexes Grasps an object when placed in hand. Turns head right round to look at objects. Eye contact firmly established. 6 month gross motor reflexes In supine, can lift head and shoulders. In prone, can rise up on hands. Sits with support. Kicks strongly. May roll over. When held, enjoys standing and jumping. 6 month fine motor reflexes Has learned to grasp objects and passes toys from hand to hand. Visual sense well established. (Frankel, Hobart, 2004 p.178-179). From Appendix 5 we can see that Child A has developed slower in the physical development area. She is able to do all the norms for a baby aged6 months but after 6 months her brother starts to develop quicker and we can see that may be crawling before she does. When observing Child A it seems that she doesnt seem to understand where her feet are, is could be because of the Hypermobility is when Connective tissue proteins such as collagen give the body its intrinsic toughness. When they are differently formed, the results are mainly felt in the moving parts the joints, muscles, tendons, ligaments which are laxer and more fragile than is the case for most people. The result is joint laxity with hypermobility and with it comes vulnerability to the effects of injury. These may cause troublesome and persistent problems, but do not affect the vital organs and thus do not pose a serious threat to life. (http://www.hypermobility.org/whatishms.php). Child B is developing physically at a norm al rate. Looking at appendix 5 we can see that he is eager to crawl and is progressing well. If I was to return to the placement family in a couple of months I predict that Child B will be crawling and able to sit unaided. One of the many main theorist that surround child development is Jean Piaget he believed that, knowledge comes from personal experiences, he recognised four individual stages. The first two years of a childs life the sensorimotor stage when babies and toddlers knowledge and understanding are chiefly drawn from physical action and their senses sight sound taste touch and smell. He suggested that throughout this stage children remain egocentric but become aware of object permanence. (Pound, 2005, p.37) Piagets first stage of development (Sensorimotor stage) is only relevant to these observations as it is aimed at children aged from birth to 2 years old. This is the stage where a child does not know that physical objects remain in existence even when out of sight. (http://www.funderstanding.com/content/piaget) Early on, children are only able to perceive things that are right in front of them, but as they mature, they understand that if a ball rolls under a chair and they can no longer see it, it still exists, under the chair. This is an especially important understanding for children, helping them to have an increased sense of safety and security since they can now grasp the fact that when mum leaves the room, she hasnt disappeared, but will soon return. (http://www.kidsdevelopment.co.uk/EncourageChildsPhysicalDevelopment.html) Both children seem to understand that when the toy is put behind mums back its not there, but they still try and reach for it as they know that mum is hiding it. But when the toys are packed away they understand that its gone. At the beginning of the placement Child B would cry when mum left the round and he continuously looked around for her, towards the end of the placement he stopped doing this. The same thing happened when they were in the buggy, Child A and Child B should start to cry as they were unable to see mum but they both could hear here. Later this stopped. Their ability to grasp objects is still developing and they are doing a lot of physical movement. They find comfort in playing with objects around them. Child A and Child B are developing an awareness of space from rolling from side to side and distance as they both reach for things. There is one toy that will engage both childrens interest and they seem to be comforted by this particular toy. The childrens mobility is developing as they are aware that reaching and moving will get them what they want and the satisfaction when this is achieved shows on their faces. Child B is able to handle and grasp object while Child A is struggling. The children become rigid, throw their limbs in the air when something has upset them, when they want to be picked up they reach out for the person. Child A and Child B have been making eye contact with their peers giving them confidence, physical, psychological and emotional comfort. The children observed enjoy the company of others and like to copy facial expressions and sounds that those around them make. Cognitive and Language development: Language development, which is from the first cry, through the growth of verbal communication skills, to true speech and understanding. Also Intellectual/cognitive development, the development of childrens ability to think and learn through interacting with their senses and experiences (Frankel, Hobart, 2004) The developmental norm for a baby aged between Birth to 9 months are: At birth Cries vigorously with some variation in pitch and duration. 1 month Cries become more differentiated to indicate needs. Stops and attends to voice, rattle and bell. 3 months Regards hands with intense interest. Beginning to vocalize. 6 months Finds feet interesting. Vocalises tunefully. Laughs in play. Screams with annoyance. Understands purpose of rattle. (Frankel, Hobart, 2004 p.178-179). From Appendix 2 we can see that Child A is developing more in the communication area as she is chatting all the time and has already said da da several times. This is encouraged by the family. Child B is not developing as fast in the language norm as his sister as he is only communicating his feelings through crying and giggling, while Child A is able to chat and sing and is now developing coping noises. Child B likes attention, looking at Appendix 2 we can see that he uses his crying language to gain attention and to be picked up. Burrhus Skinner worked on the Behaviourist theory, which humans act to avoid punishment and gain reward. Skinner emphasised reward. He believed that punishment was counter-productive. Skinner also applied behaviourism to language. He believed that all language was learned by reward. How Children Learn, Linda Pound 2005. So Child B understands that his crying will eventually lead to reward of being picked up which is what he wants. The mother in the placement is trying to stop this as she believes that children should be left to entertain themselves. Chomsky was so opposed to Skinners views that he developed a theory, based on the idea of language development as an innate process. He hypothesised that we are born with a language acquisition device which gives us an inbuilt understanding of language structure. Noam Chomsky proposed that all humans have a LAD, (language acquisition device). The LAD contains knowledge of grammatical rules common to all languages. The LADÃÆ'‚Â  also allows children to understand the rules of whatever language they are listening to. Chomsky also developed the concepts of transformational grammar, surface structure, and deep structure. -www.languagedevelopment.tripod.com Noam Chomskys theory that humans are born with a special biological brain mechanism, called a Language Acquisition Device (LAD). His theory supposes that the ability to learn language is inborn, that nature is more important than nurture and that experience using language is only necessary in order to activate the LAD. (Fifty Major Thinkers on Education from Confucius to Dewey, Joy. A. Palmer). So therefore Child A and B are already aware to what is being said around them and have some understanding of language, they would definitely sense tone of voice and both children can recognise their mothers voice as a comfort noise. Appendix 3 also shows cognitive development in that both children are use to their bath time routine and like the experience. The children make sounds in social interaction. Their interaction with Child C (older sibling) creating interest and they enjoy interacting with her. Sound levels are intriguing when there is a sudden noise. Lev Vygotsky is also another important child development theorist he emphasised the importance of families, communities and other childrens influences on children. Vygotsky believed that language and thinking were key; talking about everyday experiences would help children learn more about communication. The zone of proximal development is what a child can do alone and what they can do with someone more skilled or experienced. The social context for learning is when child learn through interaction with others. How Children Learn, Linda Pound 2005. Social and Emotional development: Emotional development, from initial total dependence to full independence and autonomy. Social development, from close bonding to full and rich relationships with a complex network of children and adults. (Frankel, Hobart, 2004) The developmental norm for a baby aged between Birth to 9 months are: At Birth Bonding/attachment. 1 month Watches mothers face with increasing alert facial expression. Fleeting smile may be wind. 3 months Reacts with pleasure to familiar situations/routines. 6 months Takes everything to mouth. Responds to different emotional tones to chief caregiver. (Frankel, Hobart, 2004 p.178-179). Erik Erikson, whose influences mainly came from Anna Freud, Sigmund Freuds daughter, was largely concerned with how personality and behaviour is influenced after birth, not before birth, and especially during childhood. In the nature v nurture (genes v experience) debate, Erikson was firmly focused on nurture and experience. His theory of eight stages of psychosocial development basically asserts that people experience eight psychosocial crisis stages which significantly affect each persons development and personality. -www.businessballs.com. Erikson created a wider and more educationally relevant theory of psychodynamics by integrating social and cultural factors into his writing. His work also stimulated interest in self-identity and adolescence. (Pound 2005) Erikson explained that things that happen when we are children affect us when we grow up. For example, we know that orphans who werent held or stroked as infants have an extremely hard time connecting with others when they bec ome adults and have even died from lack of human contact. During the first year of life, a baby forms their first feelings about the world and whether or not it is a safe place based on the level of consistent care provided by the primary caregivers. When trust develops successfully, the child gains a sense of security but if this sense is not developed, a fear and inner mistrust of the world is formed. Anxiety and insecurity are indicative of an unsuccessful beginning. (http://www.kidsdevelopment.co.uk/EriksonsPsychosocialDevelopmentTheory.html) Babies like putting everything into their mouths, and their senses of taste, are the primary sensory organs until about the age of 8 months. And even afterwards its still a first stop in terms of exploring things (touch is a very important first sense, too).Mouths are useful for exploring the texture of things, too. As we can see from Appendix 2 and Appendix 6. Child A and Child B both like to explore objects by putting them into their mouths. While Bronfenbrenners theory, in line with the social constructionist theories of Vygotsky, Urie Bronfenbrenner (1917-2005) developed the ecological systems theory to explain how everything in a child and the childs environment affects how a child grows and develops. He labelled different aspects or levels of the environment that influence childrens development, including the Microsystems, the mesosystem, the exosystem, and the macrosystem. (http://www.mentalhelp.net/) Child A and Child B are beginning to understand their environment as the family have a routine, which we can see from Appendix 4, that the children are aware of the routine and that putting them down on the carpet means time to move about. Jay Belsky believed in high-quality child care, he produced an evaluation of the Sure Start programme and a report published in 2005 inform that in Sure Start areas the most underprivileged groups had managed rather worse that similar groups in non-Sure Start areas. The next report issued in 2008 showed much greater improvements. Belsky reported that the risks are that more hours in any kind of childcare across the first four-and-a-half years of life and, independently, the more time in childcare centres, the higher the levels of problem behaviour(and) that children who spend more time in non-maternal care through their infancy, toddler and pre-school years experience somewhat less harmonious mother-child relationships through their first three years. They start school being somewhat more aggressive and disobedient than children with less non-maternal experience. How Children Learn 3, Linda Pound 2005. Appendix 4 shows that Child C attained a child minder on Wednesdays. The placemen t mother has spoken about her believes in making her children more independent which is why her first two children have gone to a child minder one day a week and she is going to take the twins to a child minder to. As she thinks it is good for the children to be able to interact with other people not just mummy, it helps them build confidence. There is a definite attachment with the mother and the children but there is also an attachment with the older siblings and the grandmother, who visits a lot. John Bowlby developed the Attachment Theory, when children show preferences for closeness to a small number of adults and these attachments are a normal and universal part of human development. We need that attachment from birth as babies seek out such attachment with the aim of being fed and protected as it brings the feeling of being safe. The attachments we have at childhood may determine our relationships as adults. How children Learn, Linda Pound 2005. From comparing the observations to the EYFS (Early Years Foundation Stage) Child A and Child B are developing an understanding of themselves and what they are capable of doing. This is recognisable during observing them in all types of situation such as carpet time, bath time and feeding. Recommendation are to let the children continue to stretch and grab things on the carpet, maybe using different material such as shining objects, crinkly objects, light, soft and heavy objects, to encourage the children to be confident and explore new objects. Babies need to develop some sense of self-identity in order to develop self-confidence and self-esteem. A starting point in this journey is to find ways of helping babies recognise themselves. (Practical EYFS Handbook, Penny Tassoni). Child B is finding it harder to gain confidence in playing solely so the mothers approach to encouraging him to do so is an ongoing process, babies cry fact but Child B needs to learn that he cant be cuddled all the time. Letting children touch things to work out for themselves what it is and letting them choose what they want and not giving in to their cry if they cant reach as they might if you give them time. Playing games with the Child A such as touching the parts of the body as you say them will help them to develop a greater understanding of where their body parts are and helps to create a happy game to play. Also playing feet moving games and moving her legs around helps stimulate her limbs. Being physical and close to your children and making eye contact with them and having conversations with them about anything provide ideal opportunities to develop language skills, especially with Child B. Using key words helps babies to develop language and singing songs and rhyming. Child B is also call another nick name which is endearing but may confuse him in developing recognition of his name. Through this observations they have lead me to believe that the children are at a normal level of development, Child A is less able to grasp an hold object and her physical development is less than Child B, as Child A has Hyper mobility which means that she will develop physical ability such as standing, crawling and sitting up straight slower than her brother (Child B). But she is communicating and talking more than her brother which could indicate that she is developing quicker in the language and communication area. There is nothing to worry about with the childrens development rate although one is developing quicker at something then the other could be because of the fact that one has hypermobility so she will definitely take longer to develop physically but also because one is female and the other male may also be a factor. The role of the practitioner is crucial in observing and reflecting on childrens spontaneous play, building on this by planning and resourcing a challenging environment which supports children and extends specific areas of learning and extends and develops childrens language and communication in their play in a safe environment. The observations taken have helped explain why the children carry out certain behaviour and have leaded me to understand more about child development theory. The most success full observation was the checklist type as it gave me direct answer, the free disruption was effective but I felt that I was missing things as they happened as I was still writing when they happened. Throughout the placement I have enjoyed the experience and I have gained experience with babies and have found that they are not as fragile as I first thought and that I do understand what their noises mean and I can distinguish between a hungry cry and Im sad I need attention, cry. I have also learned that it is healthy for babies not to be seen to straight away when they first start to cry, that they can indeed sort themselves out and ignoring and leaving the children to cry helps them to become more independent.