Sales-Advertising Relationship: An Application of Panel Data from the German Automobile Industry

This paper uses panel data from the German car industry for the estimation of parameters of a demand equation applying different statistical methodologies and paying special attention to advertising variables. Two important conclusions can be drawn. First, advertising plays an important role in this market but its effectiveness depends on its form and type of message; and second, the marketing policy of a firm has to take into account the size of its cars.