COMMUNICATIONS BUDGETING METHODS 189Some researchers have developed paradigms that are of practical use to marketers wanting
to assess the eff ects of their share of voice (SOV) on their share of market (SOM). Share of
voice is calculated as the ratio of own communications investments divided by the commu-
nications investments of all market players. A study on the impact of advertising of competi-
tors with comparable products on market share, not taking into account the advertising
quality or any formal or content characteristics of advertising, came to the following conclu-
sions.^14 Ad spendings will only infl uence market share (SOM) when there is a diff erent adver-
tising intensity over a long period. Marginal budget changes do not aff ect SOM. If competitors
aggressively augment their communications budgets, this can be countered by following with
increasing communications expenditure. If, however, there is no reaction to this attack, the
increase in SOV will lead to a higher SOM. Th is means that market leaders will have to track the
expenditures of competitors and react to changes to prevent them from gaining market share.
As shown in Figure 6.4 , the largest and the smallest player in the market are located above
the 45° line. Th is means that their SOV is smaller than their SOM. Th e follower in a market
is located in a position where it has a higher SOV than market share. Leaders enjoy eco-
nomies of scale and have a smaller advertising cost per unit. Th e smallest players should focus
on niches because they do not have the resources to compete with the leader and are only
profi table if they concentrate on specifi c niches and forget growth ambitions. If followers
want to increase their market share, they will have to increase their SOV above their SOM.
Th is will put pressure on their profi tability, which could be dangerous for their competitive
positions. Th is is why stuck-in-the-middle positions are very diffi cult to hold and market
consolidation will lead to two or three large leaders, like Coca-Cola and Pepsi in the cola
market. Th ese leaders will have to compete with local or national strong brands (niche
players). A market will stay in equilibrium as long as the market leaders keep their SOV
within a certain range. Market shares and positions will only change with a minimum of 20 or
30 percentage-point diff erences in SOV.
In Figure 6.5 a matrix is proposed with strategic recommendations for communications
budgets in diff erent market situations.
Th e relation between SOV and SOM in diff erent market situations was also studied by
Jones.^15 Brands with a higher SOM than SOV are called profi t-taking brands. Brands with the
opposite relation are investment brands. In his study of 23 countries, data on 1096 brands in
repeat-purchase packaged goods markets were collected ( Table 6.2 ).Figure 6.4 Relation between SOM and SOV in market dynamics
Source : Reprinted by permission of Harvard Business Review. Based on ‘Ad Spending: Growing Market Share’ by Schroer, J.C.
68(1), 1990. Copyright © 1990 by the Harvard Business School Publishing Corporation. All rights reserved.M06_PELS3221_05_SE_C06.indd 189M06_PELS3221_05_SE_C06.indd 189 6/5/13 3:01 PM6/5/13 3:01 PM