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.

Investopedia explains '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.



comments powered by Disqus
Hot Definitions
  1. Cash and Carry Transaction

    A type of transaction in the futures market in which the cash or spot price of a commodity is below the futures contract price. Cash and carry transactions are considered arbitrage transactions.
  2. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  3. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  4. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  5. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  6. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
Trading Center