CONTENTS

Coupon Redemption and Cheese Purchase Timing

Manager's Viewpoint

Why Economic Analysis in the Evaluation Strategy?

Editor's Notes

Director’s Corner

Next Meeting

NEC-63 Spring 1996 May 26-27, 1996 Cancun, Mexico Agricultural Commodity Promotion Policies and Programs in the Global Agrifood System

Manager's Viewpoint

by Rick Naczi, Executive Vice President
American Dairy Association and Dairy Council

I do not think that there is a more difficult challenge for evaluation than the field of generic promotion. The large number of variables that impact category sales might lead any sane person to throw up their hands, but generic promoters are driven to find a way to prove their worth. The key to a successful evaluative process is the desire to measure everything that is part of the marketing plan. This means that you have to use a large variety of measurement tools to accomplish your objective.

The most valuable measurement tool is direct sales data. The problem is that it is very difficult to generate accurate category data. Many states have traditionally collected sales figures, but state budget cuts have made that data less timely and less accurate. In fact, we frequently find major problems in the fluid milk data from the more well-financed for-profit corporations. We try, whenever possible, to collect proprietary data from promotion partners, but the nature of that data makes it unavailable for use in reporting out to our investors.

Many commodities have had the benefit of using econometric modeling as a source of return on investment information for their constituents. This type of measurement suffers from the same problems as direct sales. The data sets may be incomplete and some information on competitive products is not available at all. This lack of perfection does not mean that econometrics is not valuable, it only means that it can be considered only one part of a total evaluative process.

There is also a place for attitudinal studies and focus group work. These are the least desirable evaluative techniques, but for some programs they are all we have. It is impossible to measure long range programs based on their annual contributions to sales. I do not believe that you should abandon such programs based on a lack of annual data, but I do believe that you should always benchmark the components of long term programming. We should never be allowed to let a program go by unmeasured simply because we are currently unable to measure its sales impact.

Finally, I believe that evaluation needs to be kept in perspective. I do believe strongly in research, but I also believe that at some point you must step out in faith. The evaluative process will give you guidance, but it will not make your decisions for you. At the point where many companies have skyrocketed to success, many of their competitors had access to the same data. Someone used that data and, along with some intuition and skill, made a move that went beyond the data. We need to continue perfecting our evaluations, while at the same time avoiding the trap of being paralyzed by the fear of moving into places where the data will not take us. We need to be even more cautious about using the data to tell us things that it has no right communicating.

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