Abstract
How does advertising influence consumer decisions and market outcomes? We utilize detailed data on consumer shopping behavior and choices over bank accounts to investigate the effects of advertising on the different stages of the shopping process: awareness, consideration, and choice. We formulate a structural model with costly search and endogenous consideration sets, and show that advertising in the U.S. banking industry is primarily a shifter of awareness as opposed to consideration or choice. Advertising makes consumers aware of more options, search more, and find better alternatives. This increases the market share of smaller banks and makes the industry more competitive.
| Language | English (US) |
|---|---|
| Pages | 611-646 |
| Number of pages | 36 |
| Journal | RAND Journal of Economics |
| Volume | 48 |
| Issue number | 3 |
| DOIs | |
| State | Published - Sep 1 2017 |
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Advertising, consumer awareness, and choice : evidence from the U.S. banking industry. / Honka, Elisabeth; Hortaçsu, Ali; Vitorino, Maria Ana.
In: RAND Journal of Economics, Vol. 48, No. 3, 01.09.2017, p. 611-646.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Advertising, consumer awareness, and choice
T2 - RAND Journal of Economics
AU - Honka,Elisabeth
AU - Hortaçsu,Ali
AU - Vitorino,Maria Ana
PY - 2017/9/1
Y1 - 2017/9/1
N2 - How does advertising influence consumer decisions and market outcomes? We utilize detailed data on consumer shopping behavior and choices over bank accounts to investigate the effects of advertising on the different stages of the shopping process: awareness, consideration, and choice. We formulate a structural model with costly search and endogenous consideration sets, and show that advertising in the U.S. banking industry is primarily a shifter of awareness as opposed to consideration or choice. Advertising makes consumers aware of more options, search more, and find better alternatives. This increases the market share of smaller banks and makes the industry more competitive.
AB - How does advertising influence consumer decisions and market outcomes? We utilize detailed data on consumer shopping behavior and choices over bank accounts to investigate the effects of advertising on the different stages of the shopping process: awareness, consideration, and choice. We formulate a structural model with costly search and endogenous consideration sets, and show that advertising in the U.S. banking industry is primarily a shifter of awareness as opposed to consideration or choice. Advertising makes consumers aware of more options, search more, and find better alternatives. This increases the market share of smaller banks and makes the industry more competitive.
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UR - http://www.scopus.com/inward/citedby.url?scp=85027699758&partnerID=8YFLogxK
U2 - 10.1111/1756-2171.12188
DO - 10.1111/1756-2171.12188
M3 - Article
VL - 48
SP - 611
EP - 646
JO - RAND Journal of Economics
JF - RAND Journal of Economics
SN - 0741-6261
IS - 3
ER -