The Power of Inertia: Conservatism in Marketing Resource Allocation

The authors propose a pragmatic methodology to provide management with directional guidance in their marketing-resource allocation decisions. The authors report on the estimated market-response functions for products from seven different industries. In each industry, the most popular marketing vehicle receives the largest share of the marketing budget. A number of rationales may explain these allocation decisions, to which the authors add the hypothesis of conservative decision making in marketing. According to this hypothesis, the observed allocation pattern signals a significant overspending on some marketing drivers and underinvestment in alternative marketing vehicles. Marketing managers, thereby, forego the profitable growth opportunities potentially available from the realiocation of their marketing budgets.