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Demographic Versus Media Advertising Effects on Milk Demand: The Case of the New York City Market

Published online by Cambridge University Press:  10 May 2017

Henry Kinnucan
Henry Kinnucan*
Affiliation:
Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, Alabama
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Abstract

An advertising-sales response model is extended to include the effects of demographic factors (age and race) as additional determinants of milk demand. Previous research indicates that the age structure of a population and its racial composition are primary factors influencing fluid milk sales. Failure to incorporate these factors in the milk demand model results in a 30 percent downward biased estimate of the advertising effect. Consequently, the economic effectiveness of milk advertising is understated when the effects of demographic variables are ignored. Changes in demographic factors (growing nonwhite population and shrinking teenage market) appear to explain the relatively flat trend in per capita milk sales in the New York City market over the period 1971–80—a period in which dairy producers spent $12 million on generic advertising of milk. Net returns to Federal Order 2 dairy farmers from generic advertising of fluid milk is estimated to average $6.07 per media dollar invested over the 1972–79 period.

Type
Research Article
Information
Northeastern Journal of Agricultural and Resource Economics , Volume 15 , Issue 1 , April 1986 , pp. 66 - 74
Copyright
Copyright © 1986 Northeastern Agricultural and Resource Economics Association 

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Footnotes

This research was completed while the author was a Research Associate in the Department of Agricultural Economics at Cornell University. Funds supporting this research were provided in part by the New York State Dairy Promotion Order. The author wishes to acknowledge the helpful suggestions and criticisms of Olan D. Forker, William G. Tomek, William H. Lesser, Gregory M. Sullivan, Lowell E. Wilson and two anonymous reviewers. AAES Journal No. 1-83540.

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