The impact of advertising on the income of MSMEs in Ecuador

Abstract

This research aims to evaluate the impact of advertising actions on sales levelin micro and small companies (MSMEs) operating in Ecuadorian territory. This investigation was initially based on the application of a survey to a sample of representative customers of micro and small companies. An in-depth analysis of the impact of advertising expenses on income in those organizations where it was found that there was a percentage of its customers who came to the organization motivated by advertising actions. As a main result, the existence of a high level of correlation between advertising expenses and income was verified, which are higher as these expenses increase and advertising actions remain stable over time. This implies that directors of MSMEs must evaluate their capability to carry out advertising expenses and to maintain these for long periods of time. The impact of advertising expenses on the income of organizations has been the subject of analysis for years, these investigations have been oriented fundamentally to the analysis of advertising in large industries, or of brands with a high level of prominence. However, the evaluation of this behaviour in the conditions of MSMEs is scarcely studied, and this type of company is the focus of this research. This study did not make a distinction between the effectiveness of the media chosen for the messages' distribution and the caliber of the advertising messages. Similarly, it failed to establish values or coefficients of relationship between the correlated variables.