Hierarchy-Of-Effects Theory

DEFINITION of 'Hierarchy-Of-Effects Theory'

A hierarchical representation of how advertising influences a consumer's decision to purchase or not purchase a product or service over time. The hierarchy-of-effects theory is used to set up a structured series of advertising message objectives for a particular product, with the goal of building upon each successive objective until a sale is ultimately made.

The objectives of a campaign are (in order of delivery): awareness, knowledge, liking, preference, conviction and purchase.

BREAKING DOWN 'Hierarchy-Of-Effects Theory'

The hierarchy-of-effects theory is an advanced advertising strategy in that it approaches the sale of a good through well-developed, persuasive advertising messages designed to build brand awareness over time. While an immediate purchase would be preferred, companies using this strategy expect consumers to need a longer decision-making process.

RELATED TERMS
  1. Advertising Appropriation

    The portion of the total marketing budget that is allocated to ...
  2. Advertising Budget

    An estimation of a company's promotional expenditures over a ...
  3. Advertising Elasticity Of Demand ...

    A measure of a market's sensitivity to increases or decreases ...
  4. Flighting

    An advertising scheduling strategy in which a business alternates ...
  5. Tailored Advertising

    Marketing and advertising campaigns that place emphasis on the ...
  6. Comparative Advertising

    A marketing strategy in which a company shows how its product ...
Related Articles
  1. Investing

    Bye, Mad Men: How the Net Is Changing Advertising (FB, TWTR)

    The Internet and digital media are changing the way companies advertise and market themselves. More targeted, varied and faster advertising is possible.
  2. Investing

    How is Programmatic Advertising Changing Media?

    Understand what programmatic advertising is as well as the technology that drives it. Learn about the top four ways programmatic advertising is changing media.
  3. Investing

    Trends And Growth In The Digital Advertising Industry

    The rapidly expanding digital advertising industry is leading a shift towards content and demanding forced innovation.
  4. Personal Finance

    How The Internet Web Ad Industry Works

    Over the past 10 years, advertising strategies have evolved as a result of technological development as the internet has provided new channels for advertisers to reach a larger audience.
  5. Professionals

    Advertising

    FINRA/NASAA Series 66 - Advertising. In this section forms of advertising, advertising standards and performance advertising.
  6. Professionals

    Advertising

    FINRA/NASAA Series 65 - Advertising. In this section definition of advertising, advertising standards and performance advertising.
  7. Investing

    Advertising From TV To Internet: An Industry History

    Changes in television consumption habits have forced advertising to target audiences through new means, namely Internet advertising.
  8. Investing

    Digital Advertising Is The Future, But Why? (ZNGA, GOOG)

    Digital advertising has outgrown the internet.
  9. Economics

    Understanding Management by Objectives

    Management by objectives is a process in which a manager and an employee agree on specific performance goals and then develop a plan to reach those goals.
  10. Professionals

    FINRA Conduct Rule 2210

    FINRA Conduct Rule 2210. In this section NASD/FINRA conduct rule 2210 - communications with the public
RELATED FAQS
  1. What are the key differences between marketing and advertising?

    Understanding the role advertising plays in the marketing mix will help business owners define their promotional strategies ... Read Answer >>
  2. How important is advertising revenue in the Internet sector?

    Learn about the importance of advertising revenue in the Internet industry. Find out how much Internet firms rely on advertising ... Read Answer >>
  3. What are some of the ways that a company can improve its brand equity?

    Learn why brand equity is so valuable in business. These strategies for gaining high exposure and a great reputation will ... Read Answer >>
  4. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
  5. What factors should a company consider when creating a marketing budget?

    Understand the process of creating a marketing budget, and learn the specific factors that should be considered for any company ... Read Answer >>
  6. Is a good's production cost related to its value?

    Learn about the history and debate regarding the metrics used to determine the value of a good and which theories place emphasis ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center