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Optimal Temporal Policies in Fluid Milk Advertising

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  • Philip R. Vande Kamp
  • Harry M. Kaiser

Abstract

This study develops an approach to obtain optimal temporal advertising strategies when consumers' response to advertising is asymmetric. Using this approach, optimal strategies for generic fluid milk advertising in New York City are determined. Results indicate that pulsed advertising policies are significantly more effective in increasing demand than a uniform advertising policy. Sensitivity analyses show that the optimal advertising policies are insensitive to reasonable variations in interest rates and the inclusion of milk demand seasonality in the model. Also less asymmetric responses to advertising are found to result in shorter optimal pulsing cycles and reduced intensity of advertising pulses. Copyright 2000, Oxford University Press.

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  • Philip R. Vande Kamp & Harry M. Kaiser, 2000. "Optimal Temporal Policies in Fluid Milk Advertising," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 274-286.
    • Handle: RePEc:oup:ajagec:v:82:y:2000:i:2:p:274-286
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    File URL: http://hdl.handle.net/10.1111/0002-9092.00024
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    References listed on IDEAS

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    1. Hani I. Mesak, 1992. "An Aggregate Advertising Pulsing Model with Wearout Effects," Marketing Science, INFORMS, vol. 11(3), pages 310-326.
    2. Donald J. Liu & Olan D. Forker, 1990. "Optimal Control of Generic Fluid Milk Advertising Expenditures," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(4), pages 1047-1055.
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    Cited by:

    1. Ueda, Takeshi & Frechette, Darren L., 2002. "Have Milk Fat Preferences Shifted? Structural Analysis of New York Milk Consumption," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 31(1), pages 1-13, April.
    2. Ralf Dewenter & Ulrich Heimeshoff, 2017. "Predicting Advertising Volumes Using Structural Time Series Models: A Case Study," Economics Bulletin, AccessEcon, vol. 37(3), pages 1644-1652.
    3. Yuqing Zheng & Harry M. Kaiser, 2009. "Evaluating the effectiveness of generic advertising versus nonadvertising marketing activities on New York State milk markets," Agribusiness, John Wiley & Sons, Ltd., vol. 25(3), pages 351-368.
    4. Sylvie Tchumtchoua & Ronald W. Cotterill, 2010. "Optimal Brand and Generic Advertising Policies in a Dynamic Differentiated Product Oligopoly," Food Marketing Policy Center Research Reports 126, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    5. Nicholson, Charles F. & Kaiser, Harry M., 2007. "The Impact of Generic Fluid Milk and Cheese Advertising on Regulated Dairy Product Markets: A System Dynamics Analysis," Working Papers 127001, Cornell University, Department of Applied Economics and Management.
    6. Dewenter, Ralf & Heimeshoff, Ulrich, 2016. "Predicting advertising volumes: A structural time series approach," DICE Discussion Papers 228, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Durham, Catherine A. & Johnson, Aaron J. & McFetridge, Marc V., 2007. "Marketing-Management Impacts on Produce Sales," Journal of Food Distribution Research, Food Distribution Research Society, vol. 38(2), pages 1-17, July.
    8. Schmit, Todd M. & Kaiser, Harry M., 2007. "Optimal Seasonal Allocation of Generic Dairy Advertising Expenditures," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(1), pages 1-23, April.
    9. Zakaria Babutsidze, 2009. "Learning How to Consume and Returns to Product Promotion," Papers on Economics and Evolution 2009-05, Philipps University Marburg, Department of Geography.
    10. Zakaria Babutsidze, 2011. "Returns to product promotion when consumers are learning how to consume," Journal of Evolutionary Economics, Springer, vol. 21(5), pages 783-801, December.
    11. Nicholson, Charles F. & Kaiser, Harry M., 2008. "Dynamic market impacts of generic dairy advertising," Journal of Business Research, Elsevier, vol. 61(11), pages 1125-1135, November.

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