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Some observations on the impact of advertising on demand

Author

Listed:
  • Jonq-Ying Lee

    (Florida Department of Citrus, and Adjunct Professor and Adjunct Associate Professor, Food and Resource Economics Department, University of Florida)

  • Mark G. Brown

    (Florida Department of Citrus, and Adjunct Professor and Adjunct Associate Professor, Food and Resource Economics Department, University of Florida)

  • Gary F. Fairchild

    (Food and Resource Economics Department, University of Florida)

Abstract

This article examines the decay structure of advertising and the incorporation of advertising in systems of demand equations by scaling and translating methods. Under the assumption that a consumer's purchase of an advertised product is directly related to his|her recall of a specific advertisement, the decay effect of advertising for everyday products is a monotonic decreasing function of time. In the scaling model, advertising has a tendency to be more effective when demand is price elastic (inelastic) given a quantity augmenting (diminishing) type scaling impact. In the translating model, the impact of advertising is related to the marginal propensity to consume.

Suggested Citation

  • Jonq-Ying Lee & Mark G. Brown & Gary F. Fairchild, 1989. "Some observations on the impact of advertising on demand," Agribusiness, John Wiley & Sons, Ltd., vol. 5(6), pages 607-618.
    • Handle: RePEc:wly:agribz:v:5:y:1989:i:6:p:607-618
    DOI: 10.1002/1520-6297(198911)5:6<607::AID-AGR2720050606>3.0.CO;2-I
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    References listed on IDEAS

    as
    1. Nichols, Len M, 1985. "Advertising and Economic Welfare," American Economic Review, American Economic Association, vol. 75(1), pages 213-218, March.
    2. Ward, Ronald W. & Myers, Lester H., 1979. "Advertising Effectiveness and Coefficient Variation Over Time," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 31(1), pages 1-11, January.
    3. Henry Kinnucan & Olan D. Forker, 1986. "Seasonality in the Consumer Response to Milk Advertising with Implications for Milk Promotion Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 562-571.
    4. Ward, Ronald W. & Chang, Julio, 1985. "Theoretical Issues Relating To Generic And Brand Advertising On Agricultural Commodities," Research on Effectiveness of Agricultural Commodity Promotion, April 9-10, 1985, Arlington, Virginia 279491, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.
    5. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
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    Citations

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    Cited by:

    1. Sartorius von Bach, Helmke, 1992. "Economic Aspects Of Advertising In Agriculture: A Review," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 31(1), March.
    2. Siskos, Y. & Matsatsinis, N. F. & Baourakis, G., 2001. "Multicriteria analysis in agricultural marketing: The case of French olive oil market," European Journal of Operational Research, Elsevier, vol. 130(2), pages 315-331, April.
    3. Capps, Oral & Seo, Seong-Cheon & Nichols, John P., 1997. "On the Estimation of Advertising Effects for Branded Products: An Application to Spaghetti Sauces," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 291-302, December.
    4. Goddard, E.W., 1994. "Nec-63 Conference On Promotion In The Marketing Mix: What Works Where And Why," Promotion in the Marketing Mix: What Works, Where and Why, April 28-29, 1994, Toronto, Canada 279588, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.
    5. Brown, Mark G. & Lee, Jonq-Ying & Behr, Robert M., 1990. "Product Labeling, Advertising and Demand for Grapefruit Juice and Grapefruit-Juice Cocktail," 1990 Annual meeting, August 5-8, Vancouver, Canada 270898, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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