Purpose: This paper aims to address two unique and important questions. First, how do recessions directly affect firms’ marketing spending decisions? Second, and more importantly, do firms which are more committed to marketing spending through past recessions achieve better stock market returns? Design/methodology/approach: This study is based on a combination of National Bureau of Economic Research, COMPUSTAT and Center for Research in Security Prices data on 6,000 firms between 1982 and 2009 which are analyzed using panel data-based regression models. Findings: The authors find that firms cut marketing spending during recessions. However, firms committed to marketing spending during past recessions achieve better stock market returns. The findings are found to be robust across B2B and B2C industries, different periods and US firms which vary on the proportion of their global revenue from non-US sales. Research limitations/implications: Top executives cut marketing budgets during recessions; however, if they can resist the pressures, and strategically continue to make marketing investments during recessions, they will achieve higher stock market returns. Originality/value: This is the first paper to establish the longer-term (not short-term) positive stock market performance of continuous (not episodic) marketing spending through past recessions, i.e. the view that marketing spending is necessary (not discretionary) for stock returns.

Despite the clearly visible effects in the popular press of analysts’ pressures on C-level executives, there is limited evidence on their effects on marketing spending decisions. This study asks two questions. First, how do analysts’ pressures affect firms’ short-term marketing spending decisions? Based on a sample of 2,706 firms during 1987-2009 compiled from Institutional Brokers Earning System, COMPUSTAT, and CRSP databases we find firms cut marketing spending. Second, more importantly, we ask if firms which remained more committed in the past to marketing spending under analysts’ pressures have higher longer-term stock market performance. We find the stock market performance of firms more committed to marketing spending under past periods of analysts’ pressures is higher. The findings are replicated for R&D spending, and robust across measures, controls, and methodologies. Consideration of two industry-based moderators, R&D spending and revenue growth, and one firm-based moderator, whether the firm is among the industry’s top four market share or other lower share firms, reveals that the findings are stronger for high R&D and growth industries and lower market share firms. One key implication is that top executives respond to analysts’ pressures by cutting marketing spending in the short-term, however, if they can resist these pressures, longer-term stock market performance is higher.

The information processing literature provides a wealth of laboratory evidence on the effects that the choice task and individual characteristics have on the extent to which consumers engage in alternative-based versus attribute-based information processing. Less attention has been paid to studying how the processing pattern at the point of purchase is associated with a consumer's propensity to buy in shopping settings. To understand this relationship, we formulate a discrete choice model and perform formal model comparisons to distinguish among several possible dependence structures. We consider models involving an existing measure of information processing, PATTERN; a latent variable version of this measure; and several new refinements and generalizations. Analysis of a unique data set of 895 shoppers on a popular electronics website supports the latent variable specification and provides validation for several hypotheses and modeling components. We find a positive relationship between alternative-based processing and purchase, as well as a tendency of shoppers in the lower price category to engage in alternative-based processing. The results also support the case for joint modeling and estimation. These findings can be useful for future work in information processing and suggest that likely buyers can be identified while engaged in information processing prior to purchase commitment, an important first step in targeting decisions. © 2013 INFORMS.