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On the Estimation of Advertising Effects for Branded Products: An Application to Spaghetti Sauces

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  • Capps, Oral
  • Seo, Seong-Cheon
  • Nichols, John P.

Abstract

Using IRI Infoscan data pertaining to six types of spaghetti sauces and employing an extension of the demand systems framework developed by Duffy, estimates are obtained of own-price, cross-price, and total expenditure elasticities as well as own- and crossproduct advertising elasticities. We augment the Duffy model through the use of a polynomial inverse lag mechanism to deal with the carryover effects of advertising. We also account for the impacts of features in newspaper fliers, in-store displays, and coupons. Advertising efforts by industry leaders in spaghetti sauce produce positive own-advertising elasticities (ranging from .000058 to .0168) and negative cross-advertising elasticities (ranging from –.000003 to –.0094). Own-price elasticities are in the elastic range, and nearly all compensated cross-price effects are positive, indicative of Hicksian substitutes.

Suggested Citation

  • Capps, Oral & Seo, Seong-Cheon & Nichols, John P., 1997. "On the Estimation of Advertising Effects for Branded Products: An Application to Spaghetti Sauces," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 291-302, December.
    • Handle: RePEc:cup:jagaec:v:29:y:1997:i:02:p:291-302_00
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    2. Seo, Seong-Cheon & Capps, Oral, Jr., 1997. "Testing For Store-Level Differences In Factors Affecting Item Movement Of Prego And Ragu Spaghetti Sauces Using Point-Of-Sale Data," Journal of Food Distribution Research, Food Distribution Research Society, vol. 28(3), pages 1-12, October.
    3. Timothy J. Richards, 2000. "A discrete|continuous model of fruit promotion, advertising, and response segmentation," Agribusiness, John Wiley & Sons, Ltd., vol. 16(2), pages 179-196.
    4. Thompson, Gary D. & Wilson, Paul N., 1999. "Market Demands For Bagged, Refrigerated Salads," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-19, December.
    5. Yuan, Yan & Capps, Oral & Nayga, Rodolfo M., 2009. "Assessing the Demand for a Functional Food Product: Is There Cannibalization in the Orange Juice Category?," Agricultural and Resource Economics Review, Cambridge University Press, vol. 38(2), pages 153-165, October.
    6. Revoredo-Giha, Cesar & Lamprinopoulou-Kranis, Chrysa & Kupiec-Teahan, Beata & Leat, Philip M.K. & Cacciolatti, Luca, 2009. "Cereal Prices, Bread Consumption and Health in Scotland," Working Papers 61121, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
    7. Gregory K. Price & John M. Connor, 2003. "Modeling coupon values for ready-to-eat breakfast cereals," Agribusiness, John Wiley & Sons, Ltd., vol. 19(2), pages 223-243.
    8. Revoredo-Giha, Cesar & Lamprinopoulou-Kranis, Chrysa & Toma, Luiza & Kupiec-Teahan, Beata & Leat, Philip M.K. & Cacciolatti, Luca, 2009. "Use of Supermarket Scanner Data to Measure Bread Consumption and Nutrition Choice in Scotland," 2009 Conference, August 16-22, 2009, Beijing, China 50399, International Association of Agricultural Economists.
    9. Carlos Arnade & Fred Kuchler & Linda Calvin, 2016. "The changing role of consumers and suppliers in a food safety event: the 2006 foodborne illness outbreak linked to spinach," Applied Economics, Taylor & Francis Journals, vol. 48(25), pages 2354-2366, May.
    10. Lee L. Schulz & Ted C. Schroeder & Tian Xia, 2012. "Studying composite demand using scanner data: the case of ground beef in the US," Agricultural Economics, International Association of Agricultural Economists, vol. 43, pages 49-57, November.
    11. Conley, Dennis M. & Wade, Mark A., 2007. "Consumer Responses to Food Safety Information from Print Media," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 10(3), pages 1-22.
    12. Revoredo-Giha, Cesar & Leat, Philip M.K. & Toma, Luiza & Lamprinopoulou-Kranis, Chrysa & Kupiec-Teahan, Beata & Cacciolatti, Luca, 2009. "Wheat Prices, Bread Consumption and Health in Scotland," Working Papers 109395, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
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