Consumer Brand Marketing through Full- and Self-Service Channels in an Emerging Economy

• Structural differences in full and self-service channels cause differences in the responses to some of the manufacturer's marketing mix elements.
• Traditional marketing mix tools are not as effective in the full-service formats.
• Package size variety, price and merchandising have a greater long-term effect on sales in self-service than in full-service channels.
• Brands' channel relationship programs support price increases in self-service channels without a corresponding decrease in sales.
• In the full-service channel, package size variety has the highest long-term effect among all of the modeled marketing mix elements.

A unique characteristic of emerging economies is the wide variety of dominant channel formats. We evaluate the influence of a brand's marketing mix on channel partners and consumer sales in both full and self-service channels in one emerging economy (Brazil). We use monthly stock-keeping-unit (SKU) level sales, and marketing mix data from the beverage category in southeastern Brazil spanning more than four years. In this study, we specify a panel vector autoregression framework with error decomposition to account for endogeneity between sales and marketing mix, cross-sectional heterogeneity among SKUs, seasonality, and the different aggregation of marketing mix elements across the channels. The results show that structural differences in these channels cause differences in the responses to some of the manufacturers' marketing mix elements. Package size variety, price and merchandising have a greater long-term effect on sales in self-service than in full-service channels. Brands' channel relationship programs support price increases in self-service channels without a corresponding decrease in sales. Distribution gains are important in both channels. In the full-service channel, package size variety has the highest long-term effect among all of the modeled marketing mix elements. Our study highlights that marketing mix strategies popular in the self-service dominant channels of the developed economies are not as effective in the full-service formats that remain important in emerging economies.

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