Hostname: page-component-8448b6f56d-gtxcr Total loading time: 0 Render date: 2024-04-16T17:19:43.477Z Has data issue: false hasContentIssue false
  • English
  • Français

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

Published online by Cambridge University Press:  28 April 2015

Oral Capps Jr. ,
Seong-Cheon Seo  and
John P. Nichols
Oral Capps Jr.
Affiliation:
Department of Agricultural Economics, Texas A&M University
Seong-Cheon Seo
Affiliation:
Department of Agricultural Economics, Texas A&M University
John P. Nichols
Affiliation:
Department of Agricultural Economics, Texas A&M University
Get access

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.

Keywords

advertising effectsdemand systemsIRI Infoscan datapolynomial inverse lagRotterdam model
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 29 , Issue 2 , December 1997 , pp. 291 - 302
Copyright
Copyright © Southern Agricultural Economics Association 1998

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bawa, K., and Shoemaker, R.W.. “The Effects of a Direct Mail Coupon on Brand Choice Behavior.” J. Marketing Res. 24(November 1987):370-76.CrossRefGoogle Scholar
Baye, M.R., Jansen, D.W., and Lee, J.W.. “Advertising Effects in Complete Demand Systems.” Appl. Econ. 24(1992):1087–96.CrossRefGoogle Scholar
Berndt, E.R., and Savin, N.E.. “Evaluation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances.” Econome-trica 32(September-November 1975):937-57.CrossRefGoogle Scholar
Brester, G.W., and Schroeder, T.C.. “The Impacts of Brand and Generic Advertising on Meat Demand.” Amer. J. Agr. Econ. 77(November 1995):969-79.CrossRefGoogle Scholar
Brown, M.G., and Lee, J.Y.. “Theoretical Overview of Demand Systems Incorporating Advertising Effects.” In Commodity Advertising and Promotion, eds., Kinnucan, H.W., Thompson, S.R., and Chang, H.-S., pp. 79–100. Ames IA: Iowa State University Press, 1992.Google Scholar
Cotterill, R.W. “Scannerdata: New Opportunities for Demand and Competitive Strategy Analysis.” Agr. and Resour. Econ. Rev. 3,2(October 1994):125-39.CrossRefGoogle Scholar
Cox, T. “A Rotterdam Model Incorporating Advertising Effects: The Case of Canadian Fats and Oils.” In Commodity Advertising and Promotion, eds., Kinnucan, H.W., Thompson, S.R., and Chang, H.-S.. Ames IA: Iowa State University Press, 1992.Google Scholar
Duffy, M.H. “Advertising and the Inter-Product Distribution of Demand.” Eur. Econ. Rev. 31(1987):1051–70.CrossRefGoogle Scholar
Goddard, E.W., and Amuah, A.K.. “The Demand for Canadian Fats and Oils: A Case Study of Advertising Effectiveness.” Amer. J. Agr. Econ. 71(August 1989):741-49.CrossRefGoogle Scholar
Green, R.D. “Dynamic Utility Functions for Measuring Advertising Responses.” In Seminar Proceedings: Research on Effectiveness of Agricultural Commodity Promotion. Arlington VA: Farm Foundation and U.S. Department of Agriculture, April 1985.Google Scholar
Green, R.D., Carman, H.F., and McManus, K.. “Some Empirical Methods of Estimating Advertising Effects in Demand Systems: An Application to Dried Fruits.” West. J. Agr. Econ. 16(July 1991):63–71.Google Scholar
Guadagni, P.M., and Little, J.D.C.. “A Logit Model of Brand Choice Calibrated on Scanner Data.” Marketing Sci. 2(Summer 1983):203-38.CrossRefGoogle Scholar
Iskow, J., Kolodinsky, J., and Russo, D.. “Demand for Specialty Products and Their Mass Market Counterparts: The Case of Pure Maple Syrup.” Selected paper presented at the annual meeting of the Northeast Agricultural Economics Association, University of Vermont, 1994.Google Scholar
Judge, G., Hill, R., Griffiths, W., Lütkepuhl, H., and Lee, T.. Introduction to the Theory and Practice of Econometrics, 2nd ed. New York: John Wiley and Sons, 1980.Google Scholar
Lee, J.Y., Brown, M.G., and Fairchild, G.F.. “Some Observations on the Impact of Advertising on Demand.” Agribus.: An Internat. J. 5(November 1989):607-18.3.0.CO;2-I>CrossRefGoogle Scholar
Mitchell, D.W., and Speaker, P.J.. “A Simple, Flexible Distributed Lag Technique: The Polynomial Inverse Lag.” J. Econometrics 31(1986):329-40.CrossRefGoogle Scholar
Nerlove, M., and Waugh, F.V.. “Advertising Without Supply Control: Some Implications of a Study of the Advertising of Oranges.” J. Farm Econ. 43(November 1961):813-37.CrossRefGoogle Scholar
Neslin, S.A., Henderson, C., and Quelch, J.. “Consumer Promotions and the Acceleration of Product Purchases.” Marketing Sci. 4(1985):147-65.CrossRefGoogle Scholar
Piggott, N.E., Chalfant, J.A., Alston, J.M., and Griffith, G.R.. “Demand Response to Advertising in the Australian Meat Industry.” Amer. J. Agr. Econ. 78(May 1996):268-79.CrossRefGoogle Scholar
Pudney, S. “An Empirical Method of Approximating the Separable Structure of Consumer Preferences.” Rev. Econ. Stud. 48(1981):561-77.CrossRefGoogle Scholar
Vanhonacker, W.R. “Modeling the Effect of Advertising on Price Response: An Econometric Framework and Some Preliminary Findings.” J. Bus. Res. 19(1989):127-49.CrossRefGoogle Scholar
Ward, R.W., and Dixon, B.L.. “Effectiveness of Fluid Milk Advertising Since the Dairy and Tobacco Adjustment Act of 1983.” Amer. J. Agr. Econ. 76(August 1989):730-40.CrossRefGoogle Scholar
Ward, R.W., and Lambert, C.. “Generic Promotion of Beef: Measuring the Impact of the U.S. Beef Checkoff.” J. Agr. Econ. 44(September 1993):456-65.CrossRefGoogle Scholar
Waugh, F.V. “Needed Research on the Effectiveness of Farm Product Promotion.” J. Farm Econ. 41(May 1959):364-76.CrossRefGoogle Scholar
Wohlgenant, M.K., and Clary, C.. “Development and Measurement of Farm to Retail Price Linkage for Evaluating Dairy Advertising Effectiveness.” J. Agr. Econ. Res. 44,4(1992):18–24.Google Scholar