Price sensitivity of Consumer Groups can be Affected by Media Exposure.

Project Apollo pilot data indicates that marketers can identify consumer groups whose sensitivity to price depends on their exposure to advertising. This is the latest in a series of marketing case studies developed from Project Apollo, by Arbitron, Inc. and The Nielsen Company.

In the study, “Brand X” users were separately analyzed as heavy, medium and light category purchasers. These users were further analyzed by their exposure to TV advertising, resulting in three groups: no exposures, low exposures, and high exposures. The case study revealed that TV exposure has a substantial impact on price sensitivity of households that frequently shop the category. An analysis that segments brand users and media exposure is an approach not possible in the conventional marketing mix modeling, which must attempt to discern marketing effects by examining the total, undifferentiated marketplace for an advertiser’s product.

The analysis found that exposure to advertising appears to decrease a consumer’s tendency to react to price changes. Pricing sensitivity is reduced even at low TV exposure levels compared to no exposures. Audiences with four or more exposures showed even less sensitivity, with behavior changes tapering off at between seven and eight exposures among viewers of “Brand X” advertising.

The results of the study also indicated in the aggregate that advertising and price elasticity are inversely related. This relationship was observed across various levels of TV exposure. Purchasers of “Brand X” who had not been exposed to TV advertising were the most sensitive to price. Those with low exposure to TV ads were less sensitive to pricing. Audiences with high exposures showed the least sensitivity to price change.

“The robustness of the Project Apollo data provides an unprecedented ability to do what is not possible with separate, unrelated data sources,” said Sharon Ameri, senior vice president, The Modeling Group, the division of The Nielsen Company that conducted the price elasticity analyses. “Before, we couldn’t segment out purchasing behaviors by type of consumers. Now we can not only track the purchasing behaviors by targeted segments, but tie changes to the amount of media exposures. While this study focuses on television, we envision follow-up work that includes the wide array of media being collected by Project Apollo and utilized by marketers. ”