Advertising Cycling to Manage Exclusivity Loss in Fashion Styles

Abstract

How Should Fashion Brands Use Advertising to Increase Sales while Remaining Exclusive? Fashion consumption signals a consumer’s status to the broader population, so fashion brands and their consumers value exclusivity. Consequently, fashion advertising must balance sales generation with exclusivity loss. In this paper, we develop a model with these features of fashion and estimate it using advertising, price, and sales data for two styles of handbags and sunglasses. Our analysis provides insights for advertising budgeting and scheduling and finds that advertising optimally should decrease as the product increases in popularity and vice versa. This exerts a braking force on sales oscillations so that the fashion cycle decays as does the optimal advertising path. In addition to demonstrating how advertising cycling can impact a fashion firm’s profitability, we show how different styles of a fashion brand can cycle at different rates. By connecting advertising cycles to fashion cycles, we provide prescriptions for how fashion firms should manage different styles of the same brand.