The Effect of Advertising on the Total Consumption of Alcoholic Drinks in the United Kingdom: Some Econometric Estimates

This paper reports upon an econometric investigation, using aggregate time series data, of the influence of prices, income and advertising upon the demand for alcoholic drink in the UK. The demand for alcoholic drink as a whole is studied initially, and then the analysis is disaggregated to the more detailed level of beer, spirits and wine, taken separately. Income appears to have a marked effect on the demand for these products, and price elasticities are in most cases low.

There is no evidence of a link between total advertising and the total consumption of all alcoholic drinks, spirits or wine. For beer, the evidence on the demand—advertising relationship is ambiguous but, for reasons discussed in the paper, there must be considerable doubt that beer advertising has had an expansionary effect on total beer consumption.     

An Econometric Study of the Demand for Various Types of Wines and Spirits in the United Kingdom

The purpose of this study is to investigate by econometric methods the influence of changes in prices, advertising and consumer tastes upon the pattern of demand for eight different types of wines and spirits during the 1970s in the United Kingdom.

Relative prices are found to play possibly an important role in the determination of wine products' market shares, but to have been insignificant in the spirits sector.

Relative levels of advertising may affect the pattern of demand between products in the way suggested by Galbraith, but the influence appears to be weak.

Product market shares may be invariant with respect to the size of the total spirits market, although this conclusion is held with least confidence for brandy which appears to grow at a relatively slow rate on average. However, wine product shares do fluctuate with the size of the total demand for wine products.

The disaggregated wine equations would appear to provide a potentially useful framework for detailed demand forecasting. However, the advantages of disaggregated analysis for this purpose are not as pronounced in the case of the spirits sector.     

Alternative Econometric Estimates of the Effect of Advertising on the Demand for Alcoholic Beverages in the United Kingdom

Using, for the first time, a system-wide approach to analysing the impact of brand advertising on generic demand and applying this new technique to the UK market for alcoholic beverages, the author finds that wine advertising has a significant impact but that spirits advertising has none.     

Lifestyle and Demographic Influences on Females' Consumption of Alcoholic Beverages

Using responses to a national survey, levels of consumption of beer, wine and spirits were related to life-style, age, education, and income. The findings suggest different sets of factors are linked to consumption levels for the various beverages, but that most life-style variables are of limited value in predicting higher levels of consumption. Implications to advertising are highlighted.     

All Things Being Equal

Abstract

While many consumers enjoy beer, wine and spirits and while many restaurant professionals believe they understand the differences among the three categories, myths and misconceptions abound within the field of beverage alcohol. By observing the production processes for each category it is evident that beer, wine and spirits are more alike than different and consumer preferences and foodservice recommendations should focus on taste, price, food selection and other subjective factors rather than misinformation as to essential nature. Physiological reactions to alcohol beverages are predicated more on the number of ethyl alcohol molecules ingested than on chosen beverage category. As production processes evidence, standard servings of 12 ounces of beer, 5 ounces of table wine and 1.5 ounces of 80 proof distilled spirits contain equivalent amounts of chemically identical alcohol. Restaurant personnel should observe drinking patterns of beer and wine consumers as closely as spirits drinkers for adverse consequences.     

Context effects of TV programme-induced interactivity and telepresence on advertising responses

This article provides an analysis of the relationship between annual advertising expenditures and sales, using a time series regression procedure, for beer, wine, and liquor sold in the United States from 1971 to 2012. Information from these four decades provides a comprehensive analysis of the relationships of numerous variables with aggregate alcohol category sales. Even though per capita alcohol consumption has not changed much throughout this period, alcohol advertising media expenditures for all alcohol beverages have increased almost 400% since 1971. This study has provided evidence of consumption changes across categories of alcohol beverages over the past 40-plus years with the preponderance of those changes significantly correlated to fluctuations in demography, taxation and income levels – not advertising. Despite other macro-level studies with consistent findings, the perception that advertising increases consumption exists. The findings here indicate that there is either no relationship or a weak one between advertising and aggregate category sales. Therefore, advertising restrictions or bans with the purpose of reducing consumption may not have the desired effect. Implications on policy decisions regarding advertising controls are addressed.     

Consumer sensitivity to changes in tax policy on consumption of alcohol

Marketers and economists have followed the consumption patterns of alcoholic beverages for many years. Public officials have studied the negative effects of consuming alcohol and have advocated a variety of measures to curtail consumption. Previous studies have also measured the price elasticity. This comparative study is based on a 40‐year analysis, and compares the consumption patterns for beer, spirits and wine in three Nordic countries. Although the cultural context of Denmark, Norway and Sweden are similar, nevertheless significant differences in the patterns of consumption and prices for alcoholic beverages have been evidenced overtime. A comparison of the per capita drinking patterns and the taxation effectiveness are presented. Even though the elasticities varied, the data indicate relative sensitivity to price changes and a decline in spirits consumption as well as switching effects to lower alcohol‐content beverages.     

发酵酒中T-2毒素污染调查分析及其风险评估

本研究建立了啤酒、葡萄酒中T-2毒素免疫学检测的前处理方法。该方法采用氯仿提取,检出限为0.2ng/mL,回收率为89.7%-101.3%。并首次对市场上啤酒和葡萄酒的T-2毒素污染水平进行了调查。在对深圳市民膳食结构调查的基础上,对啤酒和葡萄酒的T-2毒素污染进行了风险评估,结果显示这两种产品风险较低。     

酒类包装物押金税务会计处理和纳税筹划

酒类企业包装物收取押金是普遍现象,不同酒包装物押金征收增值税和消费税的规定是不相同的。本文分别以白酒、啤酒、黄酒和其他酒为分析对象,首先探讨收取押金的税务会计处理,其次分析包装物收取押金不退和连同产品一起销售相比的纳税筹划利益,得出酒类包装物收取押金可以获得延期纳税筹划利益。得出啤酒和黄酒包装物收取押金获得延期纳税筹划利益较大,白酒包装物收取押金会计处理方法不同影响纳税筹划利益等研究结论,为酒类企业经营管理者进行纳税筹划决策提供一些建设性意见。     

Advertising effect on primary demand: a cointegration approach

This paper addresses the question of the effects of advertising on the primary demand for whisky in Italy. In contrast to previous works, this issue is investigated in a multivariate framework by referring to Johansen's cointegration technique; this choice allows the non-stationary dynamics of aggregate marketing data to be taken into account, as well as their short-term and long-term relationships. Even if advertising is linked to real prices and sales in the long run, our analysis reveals no evidence supporting the effectiveness of advertising on the aggregate demand for whisky, which is essentially determined by the real price, both in the short and the long term.     

The impact of advertising on consumer price sensitivity in experience goods markets

In this paper we use Nielsen scanner panel data on four categories of consumer goods to examine how TV advertising and other marketing activities affect the demand curve facing a brand. Advertising can affect consumer demand in many different ways. Becker and Murphy (Quarterly Journal of Economics 108:941–964, 1993) have argued that the “presumptive case” should be that advertising works by raising marginal consumers’ willingness to pay for a brand. This has the effect of flattening the demand curve, thus increasing the equilibrium price elasticity of demand and the lowering the equilibrium price. Thus, “advertising is profitable not because it lowers the elasticity of demand for the advertised good, but because it raises the level of demand.” Our empirical results support this conjecture on how advertising shifts the demand curve for 17 of the 18 brands we examine. There have been many prior studies of how advertising affects two equilibrium quantities: the price elasticity of demand and/or the price level. Our work is differentiated from previous work primarily by our focus on how advertising shifts demand curves as a whole. As Becker and Murphy pointed out, a focus on equilibrium prices or elasticities alone can be quite misleading. Indeed, in many instances, the observation that advertising causes prices to fall and/or demand elasticities to increase, has misled authors into concluding that consumer “price sensitivity” must have increased, meaning the number of consumers’ willing to pay any particular price for a brand was reduced—perhaps because advertising makes consumers more aware of substitutes. But, in fact, a decrease in the equilibrium price is perfectly consistent with a scenario where advertising actually raises each individual consumer’s willingness to pay for a brand. Thus, we argue that to understand how advertising affects consumer price sensitivity one needs to estimate how it shifts the whole distribution of willingness to pay in the population. This means estimating how it shifts the shape of the demand curve as a whole, which in turn means estimating a complete demand system for all brands in a category—as we do here. We estimate demand systems for toothpaste, toothbrushes, detergent and ketchup. Across these categories, we find one important exception to conjecture that advertising should primarily increase the willingness to pay of marginal consumers. The exception is the case of Heinz ketchup. Heinz advertising has a greater positive effect on the WTP of infra-marginal consumers. This is not surprising, because Heinz advertising focuses on differentiating the brand on the “thickness” dimension. This is a horizontal dimension that may be highly valued by some consumers and not others. The consumers who most value this dimension have the highest WTP for Heinz, and, by focusing on this dimension; Heinz advertising raises the WTP of these infra-marginal consumers further. In such a case, advertising is profitable because it reduces the market share loss that the brand would suffer from any given price increase. In contrast, in the other categories we examine, advertising tends to focus more on vertical attributes.

An empirical analysis of national and local advertising effect on price elasticity

This paper investigates the interaction effect of advertising and price on the market share of a consumer nondurable product. We postulate a model in which local advertising is thought to primarily affect the consumers' purchase by making the demand more price sensitive, and national advertising to affect the consumers' preference, thus making the demand less price sensitive. Moreover, we hypothesize that local advertising interaction will have more immediate effect, while national advertising interaction will have longer term interaction effects. We apply these ideas empirically, and find support for our hypotheses. Thus, the interaction effect of advertising and price can be characterized by both increased and decreased price sensitivity, depending on the type of advertising. Moreover, these effects may be present simultaneously for the same product.     

An Empirical Model of Advertising Dynamics

This paper develops a model of dynamic advertising competition, and applies it to the problem of optimal advertising scheduling through time. In many industries we observe advertising “pulsing”, whereby firms systematically switch advertising on and off at a high-frequency. Hence, we observe periods of zero and non-zero advertising, as opposed to a steady level of positive advertising. Previous research has rationalized pulsing through two features of the sale response function: an S-shaped response to advertising, and long-run effects of current advertising on demand. Despite considerable evidence for advertising carry-over, existing evidence for non-convexities in the shape of the sales-response to advertising has been limited and, often, mixed. We show how both features can be included in a discrete choice based demand system and estimated using a simple partial maximum likelihood estimator. The demand estimates are then taken to the supply side, where we simulate the outcome of a dynamic game using the Markov perfect equilibrium (MPE) concept. Our objective is not to test for the specific game generating observed advertising levels. Rather, we wish to verify whether the use of pulsing (on and off) can be justified as an equilibrium advertising practice. We solve for the equilibrium using numerical dynamic programming methods. The flexibility provided by the numerical solution method allows us to improve on the existing literature, which typically considers only two competitors, and places strong restrictions on the demand models for which the supply side policies can be obtained. We estimate the demand model using data from the Frozen Entree product category. We find evidence for a threshold effect, which is qualitatively similar to the aforementioned S-shaped advertising response. We also show that the threshold is robust to functional form assumptions for the marginal impact of advertising on demand. Our estimates, which are obtained without imposing any supply side restrictions, imply that firms should indeed pulse in equilibrium. Predicted advertising in the MPE is higher, on average, than observed advertising. On average, the optimal advertising policies yield a moderate profit improvement over the profits under observed advertising.JEL Classification: L11, L66, M30 M37 R12     

The differentiated effect of advertising on readership: evidence from a two-sided market approach

In this paper, we empirically analyze the French print media market by modeling the existence of a reciprocal effect between the size of the readership and the amount of advertising. For this two-sided platform, we measure the cross-effects of advertising on the readership and periodical popularity on advertising. By estimating a structural model of simultaneous demand equations, we quantify some crucial elements in designing pricing and product-differentiating strategies. We measure the impact of advertising on reader demand and find in the data that it has opposite effects depending on whether the publication presents informational or entertaining content. By taking into account the market interactions, we compute price and advertising elasticities. Our results show that advertisers targeting a specific category of the audience would choose its corresponding periodicals and would trade off the size of the readership for these periodicals and the advertising insert price changes. Also, advertising campaigns aimed at reaching a broader spectrum of the population should focus on popular titles and on titles for which demand is inelastic to ensure a more consistent impact of the campaign. Finally, for magazines with low price demand elasticity on the readers’ side, editors’ revenues could be improved by increasing prices. These combined effects should allow a publisher to generate positive margins from both sides of the market, for certain content categories.     

The Current Impact and Carryover of Advertising on Sales in the Restaurant Industry

ABSTRACT

A common source of conflict in the relationship between restaurant franchise and franchisee involves advertising fees. Conflict arises when the franchisee feels that he or she has not received an adequate return on his or her advertising investment. This paper reports the results of a study conducted on both the short-term and long-term effectiveness (duration) of advertising among restaurant chains. The findings suggest that only a small proportion of restaurant chains enjoy immediate, positive returns to their advertising fees. However, over half of all chains examined realized a significant carryover effect of advertising. Several explanations are offered as to why these results are found and recommendations are made as to how restaurant chains should react to these findings.     

An Econometric Study of Advertising and Cigarette Demand in the United Kingdom

This article reports the results of an empirical investigation of the effect of total cigarette advertising on aggregate demand for cigarettes in the United Kingdom. The research is conducted within the framework of the Becker-Murphy model of rational addictive behaviour, using time series spanning the period 1963–1992. No evidence is found in this research to back up the view that aggregate cigarette advertising has the effect of expanding total market demand for cigarettes.     

温度对黄酒生产的影响

在黄酒生产中,有很多因素会影响黄酒的品质,因此黄酒生产对外界因素有着较多的要求。其中较为主要的是温度对黄酒品质的影响。基于此,本文结合黄酒的主要生产过程,探讨温度对黄酒生产的影响,从而正确认识和探究黄酒恰当的生产温度,确保黄酒生产质量的稳定及技术的有效提升。     

The Advertising–price Relationship: Theory and Evidence

The relationship between advertising and price is important because the welfare effect of advertising depends upon the price effect of advertising. We attempt to provide a better understanding of the theoretical relationship between advertising and price. We establish theoretical conditions sufficient for advertising to raise prices. This will occur, for example, when firms play a supermodular game – a structure that considers the type of advertising (i.e., persuasive, image creating, or informative) and the effect that advertising has on a firm’s demand and costs. We also compare results from two simple duopoly models, one with horizontal and the other with vertical differentiation, and find that only the model with horizontal differentiation is supermodular for the forms of advertising that are thought to raise price (e.g., persuasive advertising). In consideration of these theoretical issues, we then develop an empirical model to determine whether advertising raises prices in the US brewing and cigarette industries.     

Decomposing the effect of advertising: What happens in the retail channel?

The diverging interests of manufacturers and retailers famously give rise to the double marginalization problem but have consequences far beyond pricing. Advertising is another marketing instrument that is under the control of the manufacturer but its ultimate effect on consumer demand also depends on retailers’ pricing decisions. We decompose the effect of advertising in the channel and highlight an additional route through which advertising affects sales, namely via the changes in the retail price that a strategic retailer makes in response to changes in demand following manufacturer advertising. The total demand effect of advertising thus comprises the direct effects of advertising on market shares, and the indirect effects coming through adjustments that the retailer makes to the in-store prices of all the brands in a given product category in response to the shifted demand due to advertising. We match advertising data for four different categories (both food and non-food) to store-level scanner panel data, which also include information on wholesale prices. Controlling for wholesale prices, we establish in a reduced-form model that the retailer reacts to manufacturer advertising by changing retail prices instead of simply imposing a constant markup on the wholesale price. To further explore the role of the strategic response of the retailer in a systematic fashion and quantify the effects derived in the decomposition, we estimate a discrete-choice model of demand and determine the magnitude of the direct and indirect effects. We find that the indirect effect of advertising through retailer prices is about half the size of the direct effect, and thus substantively affects advertising effectiveness.