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Does Generic Advertising Help or Hurt Brand Advertising?



The purpose of this study is to investigate whether the generic advertising helps or hurts the brand advertising within the differentiated product environments. We develop an analytical model that includes both generic and brand advertising expenditures considering vertical product differentiation. Then the analysis is devoted to examine how marginal effects of expenditure affect each other under product differentiation. To help examine the relationship, we also include a new variable, the degree of product differentiation. Analytical results show that when the generic advertising increases the product differentiation, the high quality brand tends to take benefits while the low quality brand loses. When generic advertising includes messages that do not differentiate quality attributes, the high quality brand loses while the low quality brand takes benefits.

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