Reply to Farris and Buzzell's Comment on ADVISOR 2 Paper

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Farris and Buzzell's (Farris, Paul W., Robert D. Buzzell. A comment on modeling the marketing mix decision for industrial products. Management Sci. this issue.) comment on my (Liuen, Gary L. 1979. ADVISOR 2: Modeling the marketing mix decision for industrial products. Management Sci. 25 191--204.) paper on the ADVISOR studies and its relationship to their work with the PIMS data calls for clarification of the methodology, objectives and results of both studies. We will show that the ADVISOR models present strong evidence in favor of a descriptive model of advertising/sales expenditures that is not constant with the dollar level of sales. This directly addresses the contention by Farris and Buzzell that modeling the A/S ratio as a constant is theoretically and empirically valid. We then explore some of the differences between the Farris-Buzzell analyses and ADVISOR that are important in understanding where and why the results differ. Next we elaborate on some of the validation analyses done for ADVISOR. Finally, we discuss in more detail the reasons for handling product profitability through a variable called product plans in the ADVISOR model.industrial marketing

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