Three paths to brand growth: new product introduction, digital advertising, and crowdfunding

Abstract

This thesis uses empirical techniques of dynamic modelling to examine three major means for brands to achieve sustainable growth, including new product introduction (NPI), digital advertising, and value co-creation with consumers through digital crowdfunding. Essay 1 (Chapter 2) explores the impact of NPI on the performance volatility of the innovating and the competing brands in the CPG industry. Using a GARCH-in-VAR modelling approach, we find that NPI causes a long-term rise in sales volatility of all brands. Such volatility increase is especially significant for new brand entries, premium-priced and more innovative brands, and retailers with a larger assortment and those where private labels dominate. More importantly, NPI's impact through sales volatility on the sales level of brands is consistently positive. Findings from Essay 1 challenge marketers' conventional wisdom to curb volatility and instead highlight brands' potential to benefit from the market turbulence following an NPI. Essay 2 (Chapter 3) investigates the effect of processing disfluency on consumers' decisions to click on digital display advertisements. With consumers flooded by digital ads, it is imperative for marketers to strike a balance between capturing consumer attention and keeping them unannoyed. A series of lab experiments combined with field data modelling using the Dynamic Factor Model indicate that processing disfluency can elicit consumer interest and desire to explore, leading to a higher willingness to click. Such disfluency does not cause consumer ad annoyance and can be induced by negative ad emotional appeals such as fear and sorrow. Essay 3 (Chapter 4) studies investment dynamics between digital crowdfunding investors, who are also the future consumers of the fundraising venture. Recognizing the co-existence between more and less informed investors, our results show that large investments by informed investors are effective signals that positively influence subsequent investors' behaviours. Such an effect is strengthened by a higher level of social similarity between investors and the size of the deal. Our findings shed light on the asymmetric information flows from more to less informed investors, and the complementarity between different types of investors.