Promotion Research Program
Annotated Bibliography
Annotated Bibliography
The purpose of this publication is to present relevant scholarly work directly related to generic commodity advertising and promotion research and evaluation in an easy-to-use form for further study and research. Sources for annotations include professional journals, books, university staff and working papers, and unpublished reports by commodity consulting firms. This report provides an update to an earlier annotated bibliography on commodity promotion evaluation done at Cornell (Hurst, S. and O.D. Forker (1991). "Annotated Bibliography of Generic Commodity Promotion Research (Revised)." A.E. Res. 91-7, Department of Agricultural Economics, Cornell University, Ithaca, NY. 48pp). The earlier report covered the period between 1961 and 1991, this report covers the period 1992-1996. The listings are in alphabetical order.
This bibliography was produced in order to create a base for continuing economic research on how generic advertising influences consumer behavior. It is hoped that this will be of interest to and help professionals in academia, government, and industry who are interested in and involved with economic analysis of commodity promotion programs.
------------ (1991). "USDA Market Development Programs." Horticultural Products Review, U.S. Department of Agriculture. Foreign Agricultural Service, Washington, DC (8-91): pgs 27-31.
The USDA allocates money to trade organizations and private industries to promote their commodities in foreign markets. The organizations and industries use this money to augment their own funds for carrying out such activities as the production and airing of TV commercials, the design and printing of point-of-sale material, and the development of recipes in foreign languages using metric measurements. Together with trade liberalization and higher incomes in some target countries, these promotional dollars have helped the exportation of U.S. horticultural products to grow beyond that of any other commodity segment in recent years.Ackerman, K.Z. and M.E. Smith (1990). "Agricultural Export Programs: Background for 1990 Farm Legislation." ERS Staff Report AGES 9033, U.S. Department of Agriculture. Economic Research Service, Washington, DC: Commodity Economics Division.
Lawmakers authorized several new export programs under the Food Security Act of 1985 in an attempt to increase agricultural exports. U.S. agricultural exports began to recover in fiscal year 1987 and, in fiscal year 1989, climbed to $39.6 billion, their highest level since 1981. Since 1986, U.S. agricultural export programs, a depreciating dollar, lower domestic commodity prices relative to world prices, and increased demand from importers have contributed to improved markets. Export programs help U.S. exporters meet subsidized competition, provide humanitarian relief, assist credit-seeking importers, and may help develop new overseas markets for U.S. agricultural products. Issues which could affect export programs in 1990 legislation include tightened U.S. and global grain stocks, potential budget exposure for increased loan guarantees, and the outcome of trade negotiations under the Uruguay Round of the General Agreement on Tariffs and Trade (GATT).Ackerman, K.Z. (1993). "Export Promotion Programs Help U.S. Products Compete in World Markets." FoodReview, U.S. Department of Agriculture. Economic Research Service, Washington, DC 16(2): pgs 31-35.
This paper provides an overview of U.S. export promotion programs designed to increase agricultural exports. The paper discusses a mix of strategies to promote U.S. products overseas, including trade servicing, technical assistance, and consumer promotions. The author also examines the Foreign Market Development Program, the Market Promotion Program, and Targeted Export Assistance Programs.Ackerman, K.Z. (1994). "Market Development Programs Help Expand U.S. High-Value Agricultural Exports." FoodReview, U.S. Department of Agriculture. Economic Research Service, Washington, DC. 17(3): pgs 23-27.
This paper examines market development programs (such as the Market Promotion Program (MPP)) and the effects such programs have on market opportunities for exporters. Also included are percentage breakdowns of market promotion funds between bulk and high-value product groupings; and between targeted consumers in East Asia and Western Europe. The paper raises many issues on the pros and cons of market development programs.Anania, G., M. Bohman, and C.A. Carter (1992). "United States Export Subsidies in Wheat: Strategic Trade Policy or Expensive Beggar-Thy-Neighbor Tactic?" American Journal of Agricultural Economics, American Agricultural Economics Association 74(3): pgs 534-545.
This paper examines the domestic and international impacts of the U.S. Export Enhancement Program (EEP) for wheat. EEP uses targeted in-kind subsidies to expand U.S. exports and was designed specifically to compete with subsidized exports from the European Community (EC). We argue the EEP cannot be welfare-improving for the U.S., even considering targeted export subsidy and determining its price, quantity, and budgetary effects. Empirical results show that no exporting country gains from EEP and that the intended loser, the EC, is only slightly harmed. We find the export subsidies generate only a small increase in U.S. wheat exports. The EEP is an expensive program: based on our estimates for 1988, government cost of additional wheat exports under the EEP reached $469 per metric ton.Armbruster, W.J. and J.E. Lenz, editors (1992). "Commodity Promotion Policy in a Global Economy." Proceedings of a Symposium, Arlington, Virginia (October 22-23). Farm Foundation, Oak Brook, IL.
The symposium was organized to review the scope of commodity promotion programs, assess the state of knowledge about program impacts, identify critical evolving policy issues, and specify future research and educational needs.Arnade, C. and D. Lee (1990). "Risk Aversion Through Non-Traditional Export Promotion Programs in Central America." ERS Staff Report, AGE S9074, U.S. Department of Agriculture. Economic Research Service, Washington, DC: Agriculture and Trade Analysis Division.
This paper discusses the growing importance of policies by Central American countries to promote non-traditional agricultural exports. It demonstrates that these programs are rational if countries are risk-averse utility maximizers. It describes the characteristics that crops must have for utility maximizers to benefit from non-traditional export promotion programs. It also shows that the recent non-traditional vegetable and fruit exports of Central America can meet these requirements.Bagwell, K. and G. Ramey (1994). "Advertising and Coordination." Review of Economic Studies 61: pgs 153-172.
When market information such as price is difficult to communicate, consumers and firms may be unable to take advantage of mutually beneficial scale economics, causing coordination failures to arise. Ostensibly, uninformative advertising expenditures can be used to eliminate coordination failures by allowing an efficient firm to communicate implicitly that it offers a low price. This provides a theoretical explanation for Benham's (1972) empirical association of the ability to advertise with lower prices and larger scale. Advertising becomes necessary for optimal coordination when the identity of the efficient firm is uncertain. An application to loss-leader pricing is developed.Bailey, K.W. and J.P. Houck (1990). "A Dynamic Assessment of the Wheat Export Enhancement Program." North Central Journal of Agricultural Economics, Ohio State University, Columbus, OH 12(2): pgs 319-332.
A major goal of the Export Enhancement Program (EEP) was to expand U.S. exports. This objective was empirically tested in this study for the case of wheat. An analytical approach, reflecting the impact of the EEP on global wheat trade, was developed and incorporated within a nonspatial equilibrium model of world wheat trade. The results suggest that the EEP expanded U.S. wheat exports 20 percent in 1986/87, but only 7 percent in 1987/88. Most of the actual expansion occurred in 1987/88 and was due to other factors.Becker, G.S. and K.M. Murphy (1993). "A Simple Theory of Advertising as Good or Bad." Quarterly Journal of Economics Vol. CVIII, pgs 941-964.
Our analysis treats advertisements and the goods advertised as complements in stable metautility functions and generates new results for advertising by building on, and extending, the general analysis of complements. By assimilating the theory of advertising into the theory of complements, we avoid the special approaches common in previous studies attempting to measure the effects of advertising. We also use this approach to evaluate advertising from a welfare perspective. Whether there is too much or too little advertising depends on several variables: the effects on consumer utility, the degree of competition in the market for advertised goods, the induced changes in prices and outputs of advertised goods, and whether advertising is sold to consumers.Blisard, N. and J.R. Blaylock (1992). "A Double-Hurdle Approach to Advertising: The Case of Cheese." Agribusiness 8(2): pgs 109-120.
This article uses a double-hurdle model to examine the demand for cheese. Essentially, this approach argues that the effects of advertising and other factors on product demand should be judged in terms of their influence on two separate decisions: the decision to participate in the market for cheese and the decision concerning how much to purchase. We find that generic advertising for natural cheese has been successful in inducing people into the cheese market but that it does not influence those already buying cheese to increase their purchases.Blisard, W.N., T. Sun, and J. Blaylock (1991). "Effects of Advertising on the Demand for Cheese and Fluid Milk." ERS Staff Report AGES 9154, U.S. Department of Agriculture. Economic Research Service, Washington, DC: Commodity Economics Division.
An advertising campaign raised fluid milk sales by about 5,975.4 million pounds during September 1984-September 1990. Natural and processed cheese (consumed at home) sales rose by about 23 and 229 million pounds in the same period. An assessment of 15 cents per hundredweight of milk sold commercially, mandated by the Dairy and Tobacco Adjustment Act of 1983, funded the increase in advertising. The authors use econometric demand models to introduce variables that would offset or complement dairy-centered advertising. In both branded and generic advertising, changes in market price, income, and the availability of substitute goods are factors that influence the demand for natural and processed cheese.Brenes, J.R., D.R. Henderson, and I.M. Sheldon (1992). "Effectiveness of Alternative Export Promotion Strategies for Branded Food Products." Journal of Food Distribution Research 23(1): pgs 137-151.
This study examines the impact on export sales of various promotional strategies for branded food products in foreign markets. It is an empirical analysis using data obtained from organizations that administer the High Value Export Incentive Program (HVEIP) for brand food products, part of the USDA's Targeted Export Assistance (TEA) program and its successor, the Marketing Assistance Program (MAP). To respect the proprietary nature of the data, the identity of individual firms and brand names has been deleted and products have been combined into two groups: 1) consumer ready and 2) intermediate. Econometric analysis is used to study the impacts of expenditures on television advertising and print media on export sales of commodities.Capps, O. Jr. and J.D. Schmitz (1991). "Effect of Generic Advertising on the Demand for Fluid Milk: The Case of the Texas Market Order." Southern Journal of Agricultural Economics 23(2): pgs 131-140.
This analysis indicates that generic advertising expenditures, ceteris paribus, generated rightward shifts in demand for fluid milk in the Texas Market Order over the period January 1980 to September 1988. Generally, the results from this study are in agreement with previous research efforts which suggest that generic advertising can increase the demand for fluid milk. Importantly, in this analysis, the impacts of television and radio advertising have been effectively disentangled. Television advertising generates a response that wears off more quickly than radio advertising. Also, the long run effect of radio advertising is about 1.75 times greater than the long run effect of television advertising.Capps, O. Jr. and J.A. Lambregts (1991). "Assessing Effects of Prices and Advertising on Purchases of Finfish and Shellfish in a Local Market in Texas." Southern Journal of Agricultural Economics 23(1): pgs 181-194.
Estimates of demand parameters for disaggregate finfish and shellfish products were obtained using scanner data from a retail food firm in Houston. Demand for the various products was elastic (except for oysters); in general, cross-price effects play a statistically significant role in pounds sold per 1000 customers. Own-advertisement effects are important, but cross-advertisement effects are generally marginal. Seasonality is a key factor in purchases of most finfish and shellfish products.Carman, H.F. and R.D. Green (1993). "Commodity Supply Response to a Producer-Financed Advertising Program: the California Avocado Industry." Agribusiness 9(6): pgs 605-621.
A simulation model of the California avocado industry is used to estimate the impact of a producer-funded generic advertising program on acreage and returns over time. Although returns from advertising can be quite favorable in the short run, improved returns simulate increased plantings and the resulting production will erode advertising returns over time. California avocado producers, after over 30 years of actively promoting their product, appear to have real returns per acre similar to those that would have occurred without advertising but advertising has become a built-in cost.Carman, H.F., R.D. Green, and G.J. Mandour (1995). "Commodity Advertising Pays...or Does It? What It Takes to Keep Those Raisins Dancing." California Agriculture 46(2): pgs 9-12.
California's farmers collectively spend more than $100 million a year to promote their products. Here are answers to such questions as: Where is the money spent? What are the public policy issues associated with government-sponsored generic commodity advertising? How successful are those campaigns? And finally, how can commodity groups improve their databases?Chang, H.S. and H.W. Kinnucan (1992). "Measuring Exposure to Advertising: A Look at Gross Rating Points." Agribusiness 8(5): pgs 413-423.
This article evaluates the relative merits of advertising expenditures and gross rating points (GRPs) as alternative measures of advertising exposure. Theoretically, GRPs and appropriately deflated advertising expenditures should provide identical representations of exposure. This hypothesis was tested using Canadian butter advertising data for the period 1984-1989. Our statistical analysis suggested the level of dollar outlays for television advertising and the associated estimated GRPs are positively related; this, however, was not the case in several instances for period-to-period changes in the level of expenditures. Because the problems of measurement errors, quality variation, and aggregation over media are shared by both data series, our tentative conclusion is GRPs are not necessarily superior to expenditures.Chyc, K.M. and E.W. Goddard (1994). "Optimal Investment in Generic Advertising and Research: The Case of the Canadian Supply-Managed Egg Market." Agribusiness 10(2): pgs 145-166.
Cooperative producer organizations face the choice of investing producer dollars in a number of ways including basic research and advertising. An empirical model is specified for the Canadian supply-managed egg market to determine whether producers should invest in research, advertising, or both. Results suggest that without financial restrictions, producers should invest more in advertising than they currently do and should also invest significantly in basic research. For any commodity, the results will be dependent on price elasticities of supply and demand as well as measured responses to advertising and research.Conboy, P., E.W. Goddard, and M. McCutcheon (1992). "Does it Matter to Advertising Investment Levels if Advertising is Considered a Fixed or a Variable Cost?" Working Paper 92/06. University of Guelph, Ontario, Canada.
Many organizations representing producer groups undertake generic advertising activities on behalf of their clients. These advertising activities are funded by producer levies per unit of production. Economic theory applied to optimizing investment in advertising for monopolists or cartels has assumed that advertising expenditure represents a fixed cost. If advertising levies represent a variable cost to individual producers, optimal investment levels will be different than if advertising represents a fixed cost. Empirical models of the Ontario and Quebec fluid milk sectors are specified, estimated, and validated. They are used to illustrate the implications of assuming advertising represents a fixed or variable cost. The empirical results suggest that if advertising is perceived by producers to be a variable cost, then in both provinces producer groups are likely to be overinvesting in advertising.Cornick, J. and T.L. Cox (1994). "Endogenous Switching Systems: Issues, Options, and Application to the U.S. Dairy Sector." Journal of Agricultural Economics Research 44(4): pgs 28-39.
This research explores the theoretical and applied issues associated with endogenous switching systems where market prices are bounded by policy instruments such as price supports. Options for estimation of model parameters and their associated standard errors are identified and explored. Application to the U.S. dairy sector illustrates the research trade-offs between conceptual rigor and empirical tractability that characterize these models. Results suggest that failure to explicitly address the endogenous switching context compromises the estimation results.Duffy, P.A. and H.W. Kinnucan (1994). "Effectiveness of Price vs. Nonprice Promotion: The Case of Cotton." Proceedings from the Beltwide Cotton Conferences. National Cotton Council of America, Memphis, TN 1:417-419.
A comparative static framework is used to analyze the effects of nonprice promotion and price subsidies for the export market. Results indicate that both tools can be effective in raising domestic cotton price and lowering government costs for cotton programs. As export demand becomes less elastic, nonprice promotion becomes the more effective tool.Fairchild, G.F. and J.Y. Lee (1990). "Citrus Export Market Development and Maintenance." Journal of Food Distribution Research 21(3):87-95.
The marketing of agricultural commodities and food products has assumed an international dimension over the past two decades. Increased funding of export development programs by the federal government and commodity organizations suggests the need for improved understanding of U.S. export development programs and of the issues associated with export market development and maintenance. The lesson to be learned from the citrus industry experience is that unless the commodity or food product being promoted can be differentiated from other competitive products, or unless the product is priced lower than competitive products, the long run effectiveness of export promotion programs will be limited.Forker, O.D. (1990). "Advertising and Promotion Investment: What is the Right Level?" Staff Paper 90-20. Cornell Agricultural Economics Department, Cornell University Agricultural Experiment Station, Ithaca, NY.
Agricultural economists in both the United States and Canada have been trying to answer this complicated question for over 12 years. Although there is no simple answer, researchers generally agree that the "right level" of advertising investment is a function of the promotion program's objective. The actual level of advertising investment in 1987 totaled $490 million in 22 dairy-producing countries. The United States, Canada, Australia, and the United Kingdom have similar levels of promotion investment per unit of milk production. A review of economic studies indicates commodity advertising investment in the U.S. is probably less then optimum at its current level of around $145 million.Forker, O.D. and H.W. Kinnucan (1991). "Econometric Measurement of Generic Advertising." International Dairy Federation, Brussels, Belgium. viii: 77 (9202).
The appropriate questions, such as how much to spend, where, and when, are much easier to ask than they are to answer. Producers' expenditures on generic advertising of agricultural commodities have grown dramatically in the past three decades, and even greater efforts are expected in the immediate future if more precise answers can be found regarding the contribution of promotion to product sales. Given that the most recent ten years have generated the greatest efforts to answer these questions, and that the potential rewards for success have grown to such heights, the International Dairy Federation decided to commission a study of advertising effectiveness measurement in the developed world. This report is intended to illustrate what we know and what can be done by way of economic analysis to help organizations make better decisions about promotional expenditures.Forker, O.D. and J.P. Nichols (1994). "Commodity Promotion Programs: Food, Agriculture, and Rural Policy into the Twenty-First Century." Westview Press, pgs 303-320.
Commodity promotion programs have evolved from small state or regional organizations funded through marketing orders or voluntary checkoffs to large national mandatory assessments. Success of these programs depends on federal enabling legislation and, in export markets, public funding. In the face of reduced federal fiscal resources, price supports and related deficiency payments will become even more limited. Commodity promotion programs, appropriately supported by federal legislation, provide a unique approach to assisting producers to integrate further into the marketing channel. But a system of analysis and accountability is necessary to make sure that the programs are in the public interest and in the best interest of the producers that fund the program.Forker, O.D. and R.W. Ward (1993). "Commodity Checkoff Programs: A Self-Help Marketing Tool for the Nation's Farmers?" Choices. Fourth Quarter.
Almost $1 billion are spent annually on advertising and research efforts to expand or at least maintain the demand for U.S. commodities. These efforts are most often funded through direct producer assessment. Do these funds really provide commodity groups a self-help marketing tool to improve the market environment? Or do the assessments represent an unjust tax and a waste of farmers' monies?Forker, O.D. and R.W. Ward (1993). Commodity Advertising: The Economics and Measurement of Generic Programs. New York, Lexington Books. (10) 294 pgs.
Over $750 million are spent annually to promote agricultural commodities. Here, for the first time, is a book that explores how that advertising money is raised and spent, the economic effectiveness of commodity promotions, and the differences between commodity and brand advertising. Forker and Ward evaluate the legislation affecting beef and dairy, and state programs such as Florida citrus, California raisins, and Washington apples. Case studies of many other commodity advertising and promotion campaigns, including cotton, wool, pork, fish, soybeans, honey, tomatoes, and potatoes, illustrate the strategies and techniques used to promote these products and to evaluate the effectiveness of the type and intensity of their advertising.Fuller, S., H. Bello, and O. Capps Jr. (1992). "Import Demand for U.S. Fresh Grapefruit: Effect of U.S. Promotion Programs and Trade Policies of Importing Nations." Southern Journal of Agricultural Economics 24(1):251-260.
This study estimates import demands for U.S. fresh grapefruit in Japan, France, Canada, and the Netherlands. Historically, these nations have imported about 90 percent of U.S. grapefruit exports. Four import demand functions are specified and estimated by joint generalized least squares based on the sample period 1969 through 1988. Results show that U.S. FOB price, per capita income of importing countries, exchange rates, price of substitutes, U.S. grapefruit promotion programs, and removal of trade restrictions have an important effect on U.S. fresh grapefruit exports. Analyses suggest that U.S. producers can effectively promote fresh grapefruit in foreign markets, and that trade concessions have an important influence on grapefruit exports.
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