Generic Product Advertising, Spillovers, and Market Concentration

We examine the decision to advertise a homogenous good. We show that the likelihood of inefficiently low advertising rests heavily on how one models the mechanism by which advertising affects demand. Regardless of this mechanism, however, there is always a lower bound of concentration below which no advertising occurs even when welfare-enhancing. In such cases, mandatory programs will raise welfare if they induce entry, although producer surplus may decline. Our model also provides an explanation for the stylized fact that advertising intensity first rises and then falls as concentration increases.     

Optimal Institutional Mechanisms for Funding Generic Advertising: An Experimental Analysis

Given the uncertain legal status of generic advertising programs for agricultural commodities, alternative voluntary funding institutions are investigated that could provide a high level of benefits to producers. This experimental study simulates key economic and psychological factors that affect voluntary producer contributions to generic advertising. The results suggest that producer referenda play a critical role in increasing contributions and that producer surplus is maximized by a provision point mechanism instituted by producer referendum with thresholds ranging from 68% to 90%, and expected funding from 47% to 77% of the time, depending on the level of advertising effectiveness.     

Decomposing the Variation in Generic Advertising Response over Time

A time-varying parameter model of fluid milk and cheese demand reveals that changes in age composition, race composition, and food spending patterns away from home were most important to changes in generic advertising response over time. Advertising response elasticities indicate that generic advertising could be enhanced by targeting young children households for fluid milk, and Asian/Hispanic households for cheese. Results also indicate that shifting targeted advertising efforts to the away-from-home market may increase generic cheese advertising response.     

Generic Advertising of U.S. Lamb

ABSTRACT

Generic advertising of U.S. lamb by the U.S. sheep and lamb industry is an effort to reverse an almost continual decline in the industry since World War II. This analysis explores the answers to three related questions: (1) What have been the effects of the generic lamb advertising on U.S. and foreign sheep, lamb, and wool markets? (2) Has the generic lamb advertising program effectively increased the consumption of domestically produced lamb as intended rather than imported lamb? (3) What have been the returns to U.S. sheep producers, feeders, and packers who pay for the advertising? Using a 70-equation, non-spatial, price equilibrium, simultaneous econometric simulation model of the world sheep, lamb, and wool markets, the analysis concludes that the U.S. lamb industry’s generic lamb advertising program has positively impacted their markets, enhanced profitability of the industry, and increased the industry’s share of domestic lamb consumption.     

Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs

Profits from generic advertising by a producer group often come partly at the expense of producers of closely related commodities. The resulting tendency toward excessive advertising is exacerbated by check-off funding. To analyze this beggar-thy-neighbor behavior we compare a scenario where different producer groups cooperate and choose their advertising expenditures jointly to maximize the sum of profits across the groups, and a scenario where they optimize independently. In an illustrative example using 1998 data for U.S. beef and pork, the noncooperatively chosen expenditure on beef and pork advertising is more than three times the cooperative optimum.     

Measuring the Effects of Generic Dairy Advertising in a Multi-Market Equilibrium

We develop a multi-market equilibrium displacement model that allows demand linkages across downstream product markets, and supply linkages through the common use of a raw commodity as the key input. Applying the model to the dairy sector, we find that the effectiveness of producer-funded advertising depends on the demand relationships across dairy product markets (cross-price and cross-advertising elasticities) as well as the reallocation of milk toward the advertised market. We show that the previous literature, which ignores the horizontal linkages highlighted here, tends to overstate the effectiveness of generic commodity promotion for dairy, and thus results in too much advertising.     

The Problem of Free Riding in Voluntary Generic Advertising: Parallelism and Possible Solutions from the Lab

Producers of many commodities pay for generic advertising, which is a public good for producers and, in cases like healthy foods, enhances social welfare. Though most programs were initially funded through the Voluntary Contribution Mechanism, many became mandatory to mitigate free riding. This experimental research simulates key economic and psychological details of these programs and produces donation results strikingly similar to a historic example. Because mandatory programs may be declared unconstitutional, the Provision Point Mechanism is tested as an alternative. This research also shows that refund-by-request donation mechanisms establish a status quo of contributing and reduce free riding.     

The Procompetitive Effect of Demand-Enhancing Check-Off Programs

This article explores demand-enhancing check-off programs and how such programs may influence both private programs as well as industry market structure. Under duopoly, a firm may increase its sales through privately funding product quality improvements. However, such endogenous sunk costs may also be used to exclude a rival. Industry-funded check-off programs affect firms' strategies and can be procompetitive. The rationale lies not only in how the check-off enhancement is perceived by consumers but also in the way the check-off's crowding-out effect reduces the ability of a firm to use its private expenditures to bar a rival's market access.     

Product Differentiation in the Spanish Beef Industry

Abstract

This paper aims to investigate changes in the structure of the Spanish quality beef industry in response to the significant decline in beef consumption happened over the last few decades. The role of product differentiation, mechanisms and factors involved in it, are specially studied. We use focus groups and a survey to examine the outlook for the organization of the beef industry, and trends in the development of product differentiation mechanisms and vertical co-ordination strategies.

Results reveal the existence of a restructuring process that is being implemented in two ways: Protected Geographical Indications (PGI) and Quality Certified Brands (QCB). Each strategy forms its own entry barriers: the origin of calves in the case of PGI and farm size in QCB; they are therefore complementary rather than competitive.     

Comparative Effectiveness of Executional Elements in TV Food Advertising on Recall and Persuasion

Abstract

Worldwide food advertising has certain common elements such as the role that executional elements play in affecting the success of commercials. This study will examine the impact of a variety of executional elements on both recall and persuasion for 15-second and 30-second television advertising. The data was collected by well known advertising agencies.     

Pricing-to-Market: Price Discrimination or Product Differentiation?

We employ a vertical differentiation model to examine the potential bias in pricing-to-market results when using export unit values aggregating differentiated products. Our results show that: (i) false evidence of pricing-to-market is always found when using unit values, whether the law of one price holds or not; and (ii) the size of the bias increases with the level of product differentiation. Our simulation results support those conceptual findings. Thus, some of the positive pricing-to-market results in the literature could be an artifact of the product heterogeneity embodied in unit values rather than evidence of imperfect competition.     

Generic Advertising; and the Structural Heterogeneity Hypothesis

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. A distinguishing characteristic of the models is the presence or absence of heteroscedasticity. Based on pretests, which failed to detect heteroscedasticity, a modified version of the stochastic-trend model is selected for hypothesis testing. Results based on data of the first 15 years of the Ontario fluid milk campaign suggest advertising responses are dynamic. Estimated advertising elasticities decline more or less monotonically over this sample period, from a high of 0.020-o.031 in the initial 1973–74 theme period, to a low of 0.0004-0.009 in the final 1986–87 theme period. The apparent declining effectiveness of the Ontario fluid milk campaign is consistent with wearout theory, and suggests 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.     

State Trading Enterprises in a Differentiated Product Environment: The Case of Global Malting Barley Markets

This study tested if the exclusive procuring and pricing policies of two state trading enterprises (STEs) in international malting barley markets could be used in a strategic trade context. The research provided four key findings. First, the global malting barley market operated in a quantity-setting oligopolistic structure during the study years. Second, both STEs and other exporting countries were in Cournot competition and thus made available strategic trade possibilities. Third, initial commodity payments were too high to generate a rent-shifting outcome. Fourth, product differentiation was confirmed, which may have dampened the desire/ability of STEs to pursue a rent-shifting objective.     

Advertising Functional Foods: The Effects of Physical Body Size and Appeal Type on Ad Credibility and Purchase Intentions

When advertising functional foods, whether these are in solid or liquid form, marketers can choose different appeal types in combination with different endorser characteristics. In this research study, the authors examine how the credibility of such an ad and purchase intentions for the advertised product are influenced by the physical body size of the endorser and the appeal type used. Based on a 2 × 2 full factorial design, they find that in an ad for an energy drink, endorser body size has an effect on both of these dependent variables, while no differences are found between a functional and an emotional appeal.     

Optimal Generic Advertising Decisions in Supply-managed Industries: Clarification and Some Further Results

Supply control enhances the incentive to promote through its ancillary trade policies that protect the domestic industry from foreign competition. Incentives are intensified when supply control is coupled with a price discrimination scheme that renders the supply of the agricultural product to the higher-priced (premium) market perfectly elastic. In this case, aper-unit levy imposed on the premium market to finance the advertising is shifted entirely to consumers, which means that the producer cost of advertising the premium product is nil. This in essence is the situation for fluid milk in Canada, Taiwan and California, which explains in part why fluid milk dominates the generic advertising scene in these regions. This article investigates these and related issues in some detail, using an earlier analysis by Goddard and McCutcheon as the point of departure. La gestion de l'offre amplifie les incitations à produire par le biais de ses politiques corrollaires de commerce extérieur qui mettent le secteur intérieur à I'abri de la concurrence étrangère. Les incitations sont defait intensifiées lorsque le contrôle de I'offre est coupléà un systéme de discrimination des prix qui rend I'offre d'unproduit agricole donné sur le marché les plus lucratifs parfaitement élastique. Dans ce cos, le droit unitaire imposé au marché le plus rentable pourfinancer la publicité est refilé entiérement aux consommateurs, de sorte que le coût à la production de la promotion duproduit vedette est nul. C'est essentiellement la situation qui prévaut pour le lait de consommation au Canada, à Taïwan et en Californie, ce qui en partie explique la prédominance de ce produit dans la publicité générique dans ces régions. Nous examinons ces questions plus ou moins en détail utilisant comme point de départ une analyse antérieure faite par Goddard et McCutcheon.     

水产品产品因素对市场需求的影响

影响水产品市场需求的因素有很多,产品因素是最主要的影响因素之一.本文论述了水产品产品因素诸如种类、质量、价格、包装、服务等对水产品市场需求的影响,并提出了如何围绕水产品产品因素扩大水产品市场需求的措施.