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Demographic Versus Media Advertising Effects On Milk Demand: The Case Of The New York City Market

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  • Kinnucan, Henry W.

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.

Suggested Citation

  • Kinnucan, Henry W., 1986. "Demographic Versus Media Advertising Effects On Milk Demand: The Case Of The New York City Market," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 15(01), pages 1-9, April.
    • Handle: RePEc:ags:nejare:28885
    DOI: 10.22004/ag.econ.28885
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    1. Stanley R. Thompson & Doyle A. Eiler, 1975. "Producer Returns from Increased Milk Advertising," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(3), pages 505-508.
    2. Kinnucan, Henry W., 1983. "Media Advertising Effects on Milk Demand: The Case of the Buffalo, New York Market with an Empirical Comparison to Alternative Functional Forms of the Sales Response Equation," Research Bulletins 184097, Cornell University, Department of Applied Economics and Management.
    3. Shiller, Robert J, 1973. "A Distributed Lag Estimator Derived from Smoothness Priors," Econometrica, Econometric Society, vol. 41(4), pages 775-788, July.
    4. Kinnucan, Henry, 1984. "Evaluating Farm Commodity Promotional * * Programs," 1984 Annual Meeting, August 5-8, Ithaca, New York 279028, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Stanley R. Thompson & Doyle A. Eiler, 1977. "Determinants of Milk Advertising Effectiveness," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(2), pages 330-335.
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