Advertisement Cause Sales or Sales Cause Advertisement: A Case of Indian Manufacturing Companies

Abstract

The present study builds on the literature already available on the inter-linkages between advertisement and sales by focusing on India. The data used in the study is the secondary data taken from the annual reports of the company and the then the statistical tools i.e. mean, median, std. deviation, regression, kurtosis, skewness used for the evaluation purpose. The study uses regression and econometric models in order to find out the cause and effect relationship between advertisement expenditure and sales. Taking 5 year data of ten manufacturing companies of India, we present their descriptive statistics, regression, unit root test, Vector Auto Regression, and Variance decomposition. Except for VAR model, rest of the tools used (Regression and Variance decomposition) clearly show that there is a significant relationship between advertisement expenditure and sales.

Keywords: Inter-linkages, Unit root test, Vector Auto Regression, Variance Decomposition