IDEAS home Printed from https://ideas.repec.org/a/ags/jlofdr/27943.html
   My bibliography  Save this article

Measuring The Impact Of Advertising And Promotion: Single-Or Multi-Equation Systems? A Case Study Of The Washington Apple Industry

Author

Listed:
  • van Voorthuizen, Hilde
  • Schotzko, R. Thomas
  • Mittelhammer, Ronald C.

Abstract

This paper reports the results of a case study analyzing the impacts of promotion and advertising conducted by the Washington Apple Commission (WAC) using both single- and multi-equation systems. The analyses are compared in terms of the comparability and coherency of results and in terms of the types of information that can be generated by the multi-equation model but not by the single-equation model. Due to the availability of detailed data from the WAC, the multi-equation system incorporates measures of actual lines of print media within an explicit model of print media as well as a measure of the multiplier effect associated with WAC promotion expenditures relative to the overall (retail-matched) level of print media. This information cannot be effectively included in a single-equation analysis. The multi-equation system also includes supply-response and price linkages between F.O.B. and retail levels. Monthly data are used for all systems. The results of this study suggest that in terms of predicting the quantity effects of promotion expenditures, if one conditions on F.O.B. price levels the effects of non-trade activities from the single equation are not statistically significant and seasonality is not a major factor in determining monthly demand. Conversely, within the multi-equation approach, results of this study suggest that non-trade activities did have a measurable impact on the demand for Washington apples and that seasonality is a major factor in determining monthly demand. In terms of predicting the price effects of promotion expenditures, if one conditions on supply elasticities, the approaches provide similar predictions of price impacts. However, the simultaneous supply feedback is significant in the apple industry case, so, by taking the interaction of supply and demand into account, the more complex multiple-equation approach predicts notable supply response-induced mitigation in price increases originally induced by promotion efforts relative to when impacts of promotions are measured under scenarios of a fixed supply function. Actual cost estimates by type of analysis are also provided for each approach. The estimates are based on actual costs incurred in conducting the analyses. The results of the case study provide a basis for assessing the necessity, as well as the benefits and costs, of conducting a detailed and complex multi-equation promotion evaluation relative to a simpler and more focused single-equation analysis of promotion effectiveness.

Suggested Citation

  • van Voorthuizen, Hilde & Schotzko, R. Thomas & Mittelhammer, Ronald C., 2003. "Measuring The Impact Of Advertising And Promotion: Single-Or Multi-Equation Systems? A Case Study Of The Washington Apple Industry," Journal of Food Distribution Research, Food Distribution Research Society, vol. 34(01), pages 1-19, March.
    • Handle: RePEc:ags:jlofdr:27943
    DOI: 10.22004/ag.econ.27943
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/27943/files/34010134.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.27943?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Chanjin Chung & Harry M. Kaiser, 2000. "Determinants of temporal variations in generic advertising effectiveness," Agribusiness, John Wiley & Sons, Ltd., vol. 16(2), pages 197-214.
    2. Henry W. Kinnucan & Olan D. Forker, 1987. "Asymmetry in Farm-Retail Price Transmission for Major Dairy Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 285-292.
    3. Alston, Julian M. & Chalfant, James A. & Christian, Jason E. & Meng, Erika C.H. & Piggott, Nicholas E., 1997. "The California Table Grape Commission's Promotion Program: An Evaluation," Monographs, University of California, Davis, Giannini Foundation, number 11932, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richards, Timothy J. & Patterson, Paul M., 1998. "New Varieties and the Returns to Commodity Promotion: Washington Fuji Apples," Working Papers 28541, Arizona State University, Morrison School of Agribusiness and Resource Management.
    2. Li, Chenguang & Sexton, Richard J., 2009. "Impacts of Retailers’ Pricing Strategies for Produce Commodities on Farmer Welfare," 2009 Conference, August 16-22, 2009, Beijing, China 51720, International Association of Agricultural Economists.
    3. Rabinowitz, Adam & Liu, Yizao & Chen, Xuan, 2016. "The Impact of Price Regulations on Farm-Retail Price Transmission: The Case of Fluid Milk," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230095, Southern Agricultural Economics Association.
    4. Carman, Hoy F. & Li, Lan & Sexton, Richard J., 2006. "A New Framework for Evaluating Commodity Promotion Programs: What Can We Learn from Disaggregate Data?," 2006 Annual meeting, July 23-26, Long Beach, CA 21229, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Richards, Timothy J. & Patterson, Paul M., 2000. "New Varieties And The Returns To Commodity Promotion: The Case Of Fuji Apples," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(01), pages 1-14, April.
    6. Aysoy, Cevriye & Kirli, Duygu Halim & Tumen, Semih, 2015. "How does a shorter supply chain affect pricing of fresh food? Evidence from a natural experiment," Food Policy, Elsevier, vol. 57(C), pages 104-113.
    7. Jung, Hanjoon Michael, 2011. "A Simple Model of Dairy Product Supply," MPRA Paper 29653, University Library of Munich, Germany.
    8. Pozo, Veronica F. & Bejan, Vladimir & Bachmeier, Lance, 2017. "Are Price Transmissions between U.S. Energy and Corn Markets Asymmetric?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258232, Agricultural and Applied Economics Association.
    9. Yeboah, Godfred & Maynard, Leigh J., 2004. "The Impact Of Bse, Fmd, And U.S. Export Promotion Expenditures On Japanese Meat Demand," 2004 Annual meeting, August 1-4, Denver, CO 19978, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Capps, Oral, Jr. & Sherwell, Pablo, 2005. "Spatial Asymmetry in Farm-Retail Price Transmission Associated with Fluid Milk Products," 2005 Annual meeting, July 24-27, Providence, RI 19316, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Richards, Timothy J. & Patterson, Paul M., 1998. "Dynamic Complementarity In Export Promotion: The Market Access Program In Fruits And Vegetables," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(2), pages 1-19, December.
    12. Lois Schertz Willett & Michelle R. Hansmire & John C. Bernard, 1997. "Asymmetric price response behavior of Red Delicious apples," Agribusiness, John Wiley & Sons, Ltd., vol. 13(6), pages 649-658.
    13. Ronald W. Cotterill, 1998. "Estimation of Cost Pass Through to Michigan Consumers in the ADM Price Fixing Case," Food Marketing Policy Center Research Reports 039, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    14. Carambas, Maria Cristina D.M., 2005. "Analysis of Marketing Margins in Eco-Labeled Products," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24600, European Association of Agricultural Economists.
    15. Tey, (John) Yeong-Sheng & Randy, Stringer & Wendy, Umberger, 2009. "Farm-retail price spread for pork in Malaysia," MPRA Paper 14532, University Library of Munich, Germany.
    16. Newton, John, 2016. "Price Transmission in Global Dairy Markets," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(B), pages 1-15, August.
    17. Xia, Tian & Sexton, Richard J., 2009. "Retail Prices for Milk by Fat Content: A New Theory and Empirical Test of Retailer Pricing Behavior," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), pages 1-20, August.
    18. Griffith, Garry R. & Moore, Walter B., 1991. "Livestock Production Policies And Meat Processing Margins: The Case Of New Zealand, 1967-1988," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(01), pages 1-28, April.
    19. Ronald Cotterill & Leonard Egan & William Buckhold, 2001. "Beyond Illinois Brick: The Law and Economics of Cost Pass-Through in the ADM Price Fixing Case," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 45-52, February.
    20. Yadavalli, Anita & Jones, Keithly, 2014. "Does media influence consumer demand? The case of lean finely textured beef in the United States," Food Policy, Elsevier, vol. 49(P1), pages 219-227.

    More about this item

    Keywords

    Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:jlofdr:27943. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/fdrssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.