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Advertising and Retail Promotion of Washington Apples: A Structural Latent Variable Approach to Promotion Evaluation

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Author Info

  • Richards, Timothy J.
  • Gao, Xiaoming
  • Patterson, Paul M.

Abstract

"Commodity promotion" consists of many activities, each designed to contribute to a consumer's product knowledge or influence tastes. However, both knowledge and tastes are unobservable, or latent, variables influencing demand. This paper specifies a dynamic structural model of fresh fruit demand that treats promotion and other socioeconomic variables as "causal" variables influencing these latent variables. Estimating this state-space model using a Kalman filter approach provides estimates of both the system parameters and a latent variable series. The results show that these latent effects contribute positively to apple and other fruit consumption, while reducing banana consumption.

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Bibliographic Info

Paper provided by Arizona State University, Morrison School of Agribusiness and Resource Management in its series Working Papers with number 28547.

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Date of creation: 1998
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Handle: RePEc:ags:asumwp:28547

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Related research

Keywords: commodity promotion; demand system; DYMIMIC; fresh fruit; Kalman filter; LA/AIDS; latent variables; Marketing;

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References

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  1. Engle, Robert F. & Lilien, David M. & Watson, Mark, 1985. "A dymimic model of housing price determination," Journal of Econometrics, Elsevier, vol. 28(3), pages 307-326, June.
  2. Burmeister, Edwin & Wall, Kent D., 1982. "Kalman filtering estimation of unobserved rational expectations with an application to the German hyperinflation," Journal of Econometrics, Elsevier, vol. 20(2), pages 255-284, November.
  3. Jonq-Ying Lee & James L. Seale & Pattana A. Jierwiriyapant, 1990. "Do trade agreements help US exports? A study of the Japanese citrus industry," Agribusiness, John Wiley & Sons, Ltd., vol. 6(5), pages 505-514.
  4. Hui-Shung Chang & Henry Kinnucan, 1990. "Advertising and Structural Change in the Demand for Butter in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 38(2), pages 295-308, 07.
  5. Watson, Mark W. & Engle, Robert F., 1983. "Alternative algorithms for the estimation of dynamic factor, mimic and varying coefficient regression models," Journal of Econometrics, Elsevier, vol. 23(3), pages 385-400, December.
  6. Pollak, Robert A & Wales, Terence J, 1980. "Comparison of the Quadratic Expenditure System and Translog Demand Systems with Alternative Specifications of Demographic Effects," Econometrica, Econometric Society, vol. 48(3), pages 595-612, April.
  7. Alston, Julian M. & Chalfant, James A. & Christian, Jason E. & Meng, Erika C.H. & Piggott, Nicholas E., 1997. "The California Table Grape Commission's Promotion Program: An Evaluation," Monographs, University of California, Davis, Giannini Foundation, number 11932.
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Citations

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Cited by:
  1. Durham, Catherine A. & Eales, James S., 2006. "Demand Elasticities for Fresh Fruit at the Retail Level," 2006 Annual meeting, July 23-26, Long Beach, CA 21099, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Richards, Timothy J. & Patterson, Paul M., 2003. "A Bilateral Comparison Of Fruit And Vegetable Consumption: U.S And Canada," 2003 Annual meeting, July 27-30, Montreal, Canada 21891, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  3. Quagrainie, Kwamena K. & McCluskey, Jill J. & Loureiro, Maria L., 2001. "Reputation And State Commodity Promotion: The Case Of Washington Apples," 2001 Annual meeting, August 5-8, Chicago, IL 20592, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Acharya, Ram N. & Molina, Ignacio, 2004. "Testing For A Change In Consumer Tastes For Fresh Fruits And Vegetables: A Structural Latent Variable Approach," 2004 Annual meeting, August 1-4, Denver, CO 20127, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Okrent, Abigail M. & Alston, Julian M., 2011. "Demand for Food in the United States: A Review of Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand," Working Papers 162515, Robert Mondavi Institute Center for Wine Economics.

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