Promotion Research Program
Annotated Bibliography (Cont'd)
Ghura, D. and R.A. Schrimper (1991). "Analysis of Newspaper Advertising of Fresh Apples in North Carolina." EIR 84. North Carolina State University, Raleigh, NC: Department of Agricultural and Resource Economics.
The purpose of this study is to examine the extent and type of advertising for fresh apples included in retail food ads in selected newspapers in North Carolina. Particular interest exists in identifying specific apple characteristics retailers selected to emphasize in their newspaper promotion. Also of interest is determining whether the type of information used by retailers to promote apples changes over time or differs in two cities in North Carolina. The results of this study are intended to provide background information to producers, retailers, and other parties interested in fresh apple promotion in North Carolina.Goddard, E.W. and D.S. Taylor (1994). "Promotion in the Marketing Mix: What Works, Where and Why." Proceedings from the NEC-63 Conference. Toronto, Ontario, Canada.
This proceedings brings together a series of papers presented at the Canadian NEC-63 conference held in 1994. There was a panel discussion of promotion strategies, budgets, and allocation decisions consisting of representatives from academia, government, and industry. Some of the papers presented dealt with topics ranging from the criteria used in selecting marketing activities, the allocation of budget between advertising and promotion, and the methods used to establish the effectiveness of promotional activities.Goddard, E.W. and A.Tielu (1987). "The OMMB's Fluid Milk Advertising." Working Paper 87/14. Department of Agricultural Economics and Business, University of Guelph, Ontario, Canada.
Advertising is a marketing tool used to a significant degree by the Ontario Milk Marketing Board. In this research, the effectiveness of the advertising campaign is evaluated using a time-series demand system model of the cold, nonalcoholic beverage market in Ontario. The results of the analysis suggest that increasing advertising expenditure on fluid milk would increase fluid milk revenue net of advertising costs to the dairy industry. Fluid milk demand is little affected by advertising of other goods in the market but does affect the demand for other beverages.Goddard, E.W. and M.L. McCutcheon (1992). "Optimal Producer and Social Payoff from Generic Advertising--The Case of Fluid Milk in Ontario and Quebec." Working Paper 92/05. University of Guelph, Ontario, Canada.
The fluid milk sectors in Ontario and Quebec operate under a myriad of restrictions reflecting the current supply management system in place. Active advertising campaigns for fluid milk are undertaken by producer organizations in each province. In Ontario, the provincial government contributes to the provincial advertising campaign. To investigate implications of the advertising programs, econometric models of the Ontario and Quebec milk sectors are specified, estimated, and simulated. Given the measured responses to advertising, optimal advertising expenditure rules (for a monopolist) are applied to the Ontario and Quebec milk sectors to evaluate the implications of moving from actual to optimal advertising expenditure for consumer and producer welfare. An optimal advertising behavioral rule for the government is also developed and applied to determine the difference between optimal producer investment and optimal social investment in advertising.Goddard, E.W. and M.L. McCutcheon (1993). "Optimal Producer Investment in Generic Advertising: The Case of Fluid Milk in Ontario and Quebec." Canadian Journal of Agricultural Economics 41(3):329-347.
The fluid milk sectors in Ontario and Quebec operate under a myriad of restrictions reflecting the current supply management system in place. Active advertising campaigns for fluid milk are undertaken by producer organizations in each province. In Ontario, the provincial government contributes to the provincial advertising campaign. To investigate the implications of the advertising programs, econometric models of the Ontario and Quebec milk sectors are specified, estimated, and simulated. Given the measured responses to advertising, optimal advertising expenditure rules are applied to the Ontario and Quebec milk sectors to evaluate the implications of moving from actual to optimal advertising expenditure for producer welfare.Goddard, E.W. and P. Conboy (1993). "Optimal International Promotion Expenditure for Differentiated Products." Review of Marketing and Agricultural Economics 61(1):49-62.
The authors develop a model that could be used to determine the optimal generic advertising expenditures for exporting countries. They tested various hypotheses about the role of advertising in an import market where goods are distinguished by country of origin. The export of U.S. beef to Japan was used as an empirical example. They note that with optimal advertising expenditure by a single exporter, in a generic sense, other exporters are also advantaged. When countries use advertising of their own country's product, other countries are disadvantaged by the program. As might be expected, the elasticities for the own-demand critically affect the optimal advertising expenditure level for a particular exporter. The concepts presented here should be of interest to any commodity organization heavily involved in export promotion activities.Haley, S.L. (1990). "Measuring the Effectiveness of the Export Enhancement Program for Poultry." Agribusiness 6(2):97-108.
This report examines the economic effects of the Export Enhancement Program in the area of poultry meat for the year 1987. Total exports have increased 79 thousand metric tons due to the program. Model results indicate that every metric ton of poultry meat subsidized has resulted in an additional 0.83 metric ton of poultry meat exports at an average cost of $761/mt. Although U.S. poultry exports have increased, other poultry exporters (including the European Community) have not been significantly affected. U.S. producers have gained marginally, while U.S. consumers have lost an equivalent amount of welfare through higher domestic poultry prices.Haley, S.L. (1992). "The U.S. Export Enhancement Program: Prospects Under the Food, Agriculture, Conservation, and Trade Act of 1990." Food Policy Oxford: Butterworth-Heinemann Limited. 17:129-140.
According to provisions of the 1990 U.S. Farm Bill, the Export Enhancement Program (EEP) will continue to be an important instrument in promoting U.S. agricultural exports and in challenging subsidizing competitors, like the European Community (EC), with funding levels set at a minimum of $500 million annually through 1995. This research, whose purpose it is to evaluate the likely effectiveness of the wheat EEP through 1995, concludes that the EEP will have a significant effect on U.S. wheat exports, but will be subject to diminishing returns at levels higher than the annual minima. Also, the EC will only be marginally affected by the EEP as it can effectively counter the provision of the EEP at low cost.Halliburton, K. and S.R. Henneberry (1993). "U.S. Overseas Promotion Programs for Peanuts: An Examination of Trade and Market Development." Agribusiness 9(6):569-583.
The study gives an overview of the U.S. government market promotion programs for peanuts as well as the U.S. trading position in international peanut markets. FAS data on the Cooperator (CMDP), Targeted Export Assistance and Market Promotion Programs (TEA/MPP) were examined to identify how program expenditures have been allocated among regions and activities. Analysis shows that during the 1986 through 1991 period, three quarters of CMDP, TEA, and MPP funding for peanuts was directed to the European Community, the largest U.S. peanut export market. Moreover, branded consumer promotion has accounted for a large percentage of program expenditures worldwide.Halliburton, K. and S.R. Henneberry (1993). "Federal Export Promotion and International Trade of U.S. Red Meats." Journal of Agribusiness 11(1):1-23.
The U.S. government's export promotion programs for red meats and the U.S. trading situation for red meats are reviewed. The Cooperator Market Development Program (CMDP), Targeted Export Assistance (TEA), and Market Promotion Programs (MPP) are examined with respect to expenditures for activities and regions. While generic consumer promotions accounted for the largest percentage of funding for activities, more than half of CMDP expenditures and roughly three quarters of TEA/MPP expenditures for red meats between 1986 and 1991 were allocated to Pacific Rim markets. Japan, the largest U.S. export market, received the majority of regional funding during the period.Halliburton, K. and S.R. Henneberry (1995). "A Comparative Analysis of Export Promotion Programs for U.S. Wheat and Red Meats." Agribusiness 11(3):207-221.
Comparison of the U.S. government's nonprice promotion programs for wheat and red meat exports reveals fundamental differences in trade and market development strategies for bulk versus value-added products. While the majority of wheat promotions have consisted of trade servicing and technical assistance activities in a variety of lesser developed countries, red meat promotions have primarily taken a generic consumer approach, focusing on only a relatively small number of higher developed countries. The timing of this analysis is critical, given that the survival of the promotion programs depends on pending reauthorization under the 1995 Farm Bill.Henneberry, S.R., K.Z. Ackerman, and T. Eshleman (1992). "U.S. Overseas Market Promotion: An Overview of Nonprice Programs and Expenditures." Agribusiness 8(1):57-78.
This study gives an overview of the U.S. government nonprice export promotion programs. FAS data on the Cooperator and Targeted Export Assistance (TEA) Programs were examined to identify how program expenditures have been allocated among activities, commodities, and regions. Analysis shows that while a significant portion of the TEA funds have been spent in highly developed countries, Cooperator Program promotions have been conducted worldwide. Traditional commodities (grains and oilseeds) received 55 percent of Cooperator funds, and horticultural products received 53 percent of the TEA allocations during the 1986 through 1988 period. The majority of TEA promotional activities have been consumer-oriented.Henneberry, S. R. (1992). "Overseas Market Promotion Programs for U.S. Wheat." Current Farm Economics. Department of Agricultural Economics, Agricultural Experiment Station, Oklahoma State University: Division of Agricultural Sciences and Natural Resources. 65(3):15-24.
Historically, export markets have been an important outlet for U.S. wheat, accounting for 60 to 80 percent of the total wheat production. Since Oklahoma wheat accounts for about 10 percent of U.S. wheat exports, declines affect Oklahoma's economy (Henneberry and Sanders). Factors such as the appreciation of the dollar, recession in the world economy, high domestic U.S. support prices, and restrictive import policies in major U.S. markets have contributed to the decline of U.S. market share in international markets. To promote exports of U.S. wheat, the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture has operated several programs. The objective of this article is to examine nonprice export promotion programs for wheat. Data for the period 1986 to 1991 will be used to illustrate how funds have been allocated among types of marketing activities and export markets.Ippolito, P.M. and A.D. Mathios (1990). "Information, Advertising, and Health Choices: A Study of the Cereal Market." RAND Journal of Economics Vol. 21, No. 3:459-479.
This article examines the effects of information on consumer and producer behavior by focusing on the ready-to-eat cereal market. Although cereal producers were initially prohibited from advertising health benefits, the regulatory ban against producer advertising was lifted during the period of this study. Our results indicate that consumers changed their behavior once informed of the health benefits and that advertising was an important source of information once the ban was lifted. Government and general information sources had limited impact on fiber cereal choices in the years prior to the advertising. Analysis of individual food consumption data indicates that theories on information acquisition are important in explaining who responds most quickly to new information; household and individual characteristics that reflect costs of acquiring information, ability to process information, and valuation of health are all important determinants of fiber cereal choices.Ippolito, P.M. and A.D. Mathios (1995). "Information and Advertising: The Case of Fat Consumption in the United States." American Economic Review Vol. 85, No. 2, May 1995:91-95.
Specifically, this study examines changes in fat and saturated fat consumption in the United States as information spread connecting lipids to heart disease and cancer risks. The study examines changes in consumption during two regulatory regimes; the years 1977-1985, when government and general information sources continued their efforts to educate the public about the links between fats and disease risks; and the years 1985-1990. Comparison of these two periods allows us to provide evidence on whether and how consumers reacted to the general flow of information prior to 1985, and whether advertising appears to have added information to the market or, as many critics believe, provided deceptive or sufficiently incomplete information to undermine public education efforts.Jensen, H.H. and J.R. Schroeter (1992). "Television Advertising and Beef Demand: An Econometric Analysis of "Split-Cable" Household Panel Scanner Data." Canadian Journal of Agricultural Economics 40:271-294.
The Beef Promotion and Research Act of 1985 led to significant increases in the generic promotion of beef in the United States. Widely familiar television advertising campaigns, distributed via national television networks, have been among the most visible outgrowths of this vigorous promotional effort. This study reports the results of econometric analysis of fresh beef consumption data for households participating in a controlled, experimental investigation of television advertising's effects on beef demand. While factors such as price, income, and household demographics are shown to be significant determinants of fresh beef purchases, the advertising campaigns apparently did not increase, and may even have decreased, the panelists' demand for beef.Kaiser, H.M., O.D. Forker, J.E. Lenz, and C.H. Sun (1992). "Evaluating Generic Dairy Advertising Impacts on Retail, Wholesale, and Farm Milk Markets." Journal of Agricultural Economics Research 44(4):3-18.
This article develops a dynamic econometric model of the national dairy industry to simulate the impacts of generic advertising on the demand for milk and dairy products, farm and consumer prices, and producer welfare. Two advertising scenarios are analyzed: (1) a historic scenario, and (2) a pre-National Dairy Promotion and Research Board (NDPRB) scenario, where generic advertising expenditures are held constant at their quarterly levels during the year prior to the NDPRB's inception. The results indicate that the program has been effective in raising farm prices, increasing dairy product demand, and reducing cheese and butter purchases by the government.Kaiser, H.M. and O.D. Forker (1993). "Analysis of Generic Dairy Advertising Scenarios on Retail, Wholesale, and Farm Milk Markets." iv: 48.
An econometric model of the United States dairy industry is used to simulate the economic impact of alternative strategies in the generic advertising of dairy products. Advertising programs for fluid milk, cheese, and butter are considered. The historic quarterly advertising expenditure levels experienced during the period October 1984 through December 1990 are used as a basis of comparison. A national model enables the analyst to simultaneously estimate the impact of changes in advertising expenditures on price and volume of sales at retail, wholesale, and farm levels of trade. The impact on government purchases can also be estimated. The simulations indicate that a reallocation toward cheese or butter will result in decreases. This simulation process using an industry model can be used to estimate the economic impact of a large number of different expenditure strategies.Kaiser, H.M. (1995). "An Analysis of Generic Dairy Promotion in the United States." Department of Agricultural, Resource, and Managerial Economics, College of Agriculture and Life Sciences, Cornell University, Ithaca, NY.
A model of the U.S. dairy industry was developed to evaluate the economic impact of generic advertising efforts on the farm, wholesale, and retail segments of the dairy industry. The model divides the dairy industry into retail, wholesale, and farm sectors, and includes the following products: fluid milk, cheese, butter, and frozen products. The impact of advertising is captured in the model by inclusion of generic expenditure levels from Leading National Advertisers (LNA) in the retail demand functions. The original model was estimated with national quarterly data from 1975 through 1990. Under this objective, we plan to update the model on an annual, or bi-annual basis. The model was used to investigate the market impacts of three sets of generic advertising scenarios on demand for milk and dairy products, farm and consumer prices, and producer welfare: (1) market conditions with and without the National Dairy Promotion and Research Board (NDPRB), (2) total generic expenditure levels varied from 5 percent to 200 percent of their historical values, and (3) advertising revenue reallocated among fluid milk, cheese, and butter.Kaiser, H.M., H.W. Kinnucan, and J.L. Ferrero, editors (1995). "New Methodologies for Commodity Promotion Economics." Proceedings from the NEC-63 Conference, Sacramento, California. The Research Committee on Commodity Promotion (NEC-63) and The National Institute for Commodity Promotion Research and Evaluation.
On October 5 and 6, 1995, NEC-63, (with the California Agricultural Issues Forum), hosted a conference entitled "Evaluation of Mandated Promotion Programs." There were two main purposes of the conference: 1) to examine issues and case studies regarding the economic and legal implications of mandatory promotion programs, and 2) to examine new methodologies for economic evaluation of commodity promotion. This proceedings focuses on the second day of the conference, which was devoted to exploring new methodologies for economic evaluation.Kaiser, H.M. and J.C. Reberte (1995). "Impact of Generic Fluid Milk Advertising on Whole, Lowfat, and Skim Milk Demand." Department of Agricultural, Resource, and Managerial Economics, College of Agriculture and Life Sciences, Cornell University, Ithaca, NY.
The purpose of this study was to determine whether there is a statistical difference in sales responsiveness to advertising among whole, lowfat, and skim milk consumers. A case study for New York City, which uses monthly time series demand data from 1986 through 1992, is presented. Separate per capita demand functions were estimated for whole, lowfat, and skim milk, retail price of orange juice, per capita income, and a health index representing consumer concerns about fat in one's diet. The results suggest that the current message of the fluid milk advertising campaign in New York City is explicitly influencing actual and potential whole and lowfat milk drinkers rather than skim milk consumers. It would be useful to apply this analytical approach to other markets to determine whether similar conclusions might hold, or whether the New York City market is unique in its response to generic fluid milk advertising.Kinnucan, H.W., H.S. Chang, and M. Venkateswaran (1993). "Generic Advertising Wearout." Review of Marketing and Agricultural Economics 61(3):401-416.
Advertising wearout, defined as the declining effectiveness of a commercial or campaign associated with increased exposure, is examined from a generic advertising perspective. Generic advertising campaigns of the type typically undertaken by agricultural commodity groups differ from branded advertising in that the former seek to increase aggregate demand for a product category (e.g. beef, milk, wool) rather than the market share of a particular brand within a category. A major hypothesis addressed in this research is whether generic campaigns are subject to the same generation-satiation-decay cycles found for the more typical brand advertising campaigns. The hypothesis is examined by estimating a time-varying parameter model using data from the first fourteen years of advertising campaign for fluid milk. Results suggest that the cycles predicted by wearout theory do exist in the case of specific generic thematic appeals. However, other phenomenon, such as a "learning curve" on the part of campaign managers, may be more important in explaining overall changes in effectiveness of generic advertising campaigns over time.Kinnucan, H.W., O.D. Forker, J.P. Nichols, and R.W. Ward (1993). "Research and Marketing Issues Facing Commodity Promotion Programs." The Food and Agricultural Marketing Consortium (1).
Export promotion in the United States is funded in part by the federal government. Domestic generic promotion is funded by producer or processor checkoff money. The authors discuss five research issues surrounding domestic commodity promotion programs: 1) the mutual cancellation hypothesis, 2) mandatory versus voluntary funding, 3) optimal assessment level, 4) economic effectiveness and 5) program management. For export promotion, the authors discuss four issues: 1) the efficacy of price versus nonprice promotions, 2) the duration of government involvement, 3) program performance and 4) welfare effects. Each of these issues is discussed in detail. Policy recommendations are made to deal with each one.Kinnucan, H.W., J.E. Lenz, and C.R. Clary (1995). "Economic Analysis of Meat Promotion." Proceedings from the NEC-63 Conference, Denver Colorado. The Research Committee on Commodity Promotion, The National Institute for Commodity Promotion, Research and Evaluation.
The purpose of this volume is to shed light on some of the more thorny issues surrounding commodity promotion programs, of which uncontrolled supply response is but one. Meat markets are selected for special study in part because meat promotion represents a substantial investment of resources, but also because some very good research has been done on the economic impacts. These studies, augmented with case studies and commentary by researchers, provide insights into the workings of commodity promotion programs that should be of value to all.Kinnucan, H.W. and M. Venkateswaran (1994). "Generic Advertising and the Structural Heterogeneity Hypothesis." Canadian Journal of Agricultural Economics 42:381-396.
This paper adduces and tests the hypothesis that generic advertising responses are dynamic, i.e., are subject to change over time due to changes in target audiences, managerial expertise, copy quality, or other time-related factors. Specifically, the authors consider the structural heterogeneity hypothesis from the perspective of three alternative econometric models that permit random and systematic time-varying response: the Prescott-Cooley model, the return-to-normality model, and the stochastic-trend model. Results showing the apparent declining effectiveness of the Ontario fluid milk campaign are consistent with wearout theory, and suggest that program managers may want to reassess marketing strategies to identify possible ways to improve performance. Given the importance of advertising elasticities in normative decision models and the growing evidence of structural heterogeneity, models that permit parameters to change over time should provide an improved basis for program assessment and resource allocation.Kinnucan, H.W. and C.R. Clary (1995). "Brand Versus Generic Advertising: A Conceptual Framework with Application to Cheese." Agribusiness 11(4):355-370.
Economic research measures the existence of advertising effects, but provides little insight into the mechanisms responsible for the observed responses. Drawing chiefly from constructs gleaned from the psychology and marketing literatures, an "inference-based" conceptual model is posited that elucidates the differing roles of generic and brand advertising in a consumer-choice setting. The model's key hypotheses, recursivity and complementarity, are tested with consumer awareness data on cheese advertising.Kinnucan, H.W. and E.T. Belleza (1995). "Price and Quantity Effects of Canada's Dairy Advertising Programs." Agricultural and Resource Economics Review 24(2):199-210.
An equilibrium-displacement model is combined with econometric estimates of key model parameters to identify the impacts of Canada's dairy advertising programs on prices and quantity. Results suggest increased advertising of fluid milk enhances the farm value of milk but has minimal effect on government costs of the dairy price-support program. Owing to government intervention in the butter market, increased butter advertising has no effect on the farm value of milk, at least in the short-run, but is highly effective at reducing government costs. Advertising is most effective, ceteris paribus, in markets where retail demand and wholesale supply for the specific dairy product are relatively price inelastic.Lee, J.Y. and M.G. Brown (1992). "Lag Structures in Commodity Advertising Research." Agribusiness 8(2):143-154.
This article examines basic assumptions about the lag structure of advertising. Evidence suggests for frequently consumed commodities, the lag structure is probably a monotonic decreasing function. Confusion may exist over what advertising variables to analyze and what shape the lag structure should take. Cumulative structures need to be differentiated from decay structures.Lenz, J.E. (1995) NICPRE Quarterly, various volumes.
The NICPRE Quarterly, as its name indicates, is a quarterly publication dealing primarily with evaluation of commodity promotion programs and other related issues. Past issues have included articles on various topics including: the beef program, methods of evaluation research, legal challenges of producers in the beef program, cotton export programs, and the California Almond program. Each issue also features a manager's viewpoint column and the director's corner, reserved for the current director of NICPRE.Lenz, J.E. and O.D. Forker (1993). "Generic Advertising as a Nonprice Marketing Strategy," in Competitive Strategy Analysis in the Food System, R.W. Cotterill (editor). Westview Press. pgs 137-154.
The purpose of this paper is to describe generic commodity advertising, and examine its potentially important role as a nonprice marketing strategy for farmers. This will be done, after an introductory review of the status of generic commodity promotion in the U.S., by discussing alternative views of advertising's value to society, presenting the theoretical underpinnings of generic advertising, and summarizing the empirical evidence concerning the impacts of generic advertising.Lenz, J.E. and O.D. Forker (1993). "Will You Vote to Dump the Dairy Board?" Hoard's Dairyman, The National Dairy Farm Magazine.
This article discusses issues associated with the national referendum on whether or not to continue dairy farmer funding of the National Dairy Promotion and Research Board (NDPRB). The authors discuss the funding of the NDPRB and what would occur if farmers voted to get rid of this program in terms of funding level by state through voluntary programs. The authors also review the results of previous economic research that looked at the effectiveness of these programs in terms of raising dairy farmer prices and incomes.Levy, A.S. and R.C. Stokes (1987). "Effects of a Health Promotion Advertising Campaign on Sales of Ready-to-Eat Cereals." Public Health Reports. Vol. 102, No. 4, July-August, pgs 398-403.
The objective of this study is to determine how the sales of various segments of the high fiber and nonhigh fiber, ready-to-eat (RTE) cereal market were influenced by a health message advertising campaign about the possible benefits of a high fiber, low fat diet for preventing some types of cancer. Estimates of market share for the various classes of RTE cereal products were obtained weekly for each store during a period of 64 weeks, beginning 16 weeks before the start of the campaign.Liu, D.J., H.M. Kaiser, O.D. Forker, and T.D. Mount (1990). "An Economic Analysis of the U.S. Generic Dairy Advertising Program Using an Industry Model." Northeastern Journal of Agricultural Resource Economics 19(1):37-48.
The market impacts of generic dairy advertising are assessed using an industry model which encompasses supply and demand conditions at the retail, wholesale, and farm levels, and government intervention under the dairy price support program. The estimated model is used to simulate price and quantity values for four advertising scenarios: 1) no advertising, 2) historical fluid advertising, 3) historical manufactured advertising, and 4) historical fluid and manufactured advertising. Compared to previous studies, the dairy industry model provides additional insights into the way generic dairy advertising influences prices and quantities at the retail, wholesale, and farm levels.Liu, D.J., C.H. Sun, and H.M. Kaiser (1995). "Estimating Market Conduct under Government Price Intervention: The Case of the U.S. Dairy Industry." Journal of Agricultural and Resource Economics (Forthcoming)
The degree of market power exercised by fluid and manufactured processors in the U.S. dairy industry is estimated. Appelbaum's quantity-setting conjectural variation approach is cast into a switching regime framework to account for the two market regimes created by the existence of the dairy price support program: a) government supported regime (market price is at the support price) and b) market equilibrium regime is above the support price. The model is also used to test whether government price intervention has a pro-competitive or anti-competitive influence on market conduct.
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