Project Apollo study shows price sensitivity can be affected by exposure

Project Apollo pilot data indicates that marketers can identify consumer groups whose sensitivity to price depends on their exposure to advertising. Project Apollo, is the pilot for a new single-source marketing research service under development by Arbitron 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 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. 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.

In related news, Arbitron and Nielsen have agreed, along with the seven members of the Project Apollo Steering Committee, to extend the pilot period for Project Apollo into Q1 ‘08.   Have an opinion on this article? Post your comment below.

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