CONTENTS

Priorities for the First Decade of the 21st Century: NEC-63

NEC-63 Spring 1999 Abstracts

Editor's Notes

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NEC-63 2000 Spring Meeting: April 2-4, 2000 Export Promotion: Challanges and Opportunities Fall Meeting: October 2-3, 2000 at the New Product Innovations Center

NEC-63 Spring 1999 Abstracts

provided by Henry W. Kinnucan

What can be done to improve the quality of advertising response estimates and to make them more useful to promotion managers? To address these questions, the Research Committee on Commodity Promotion (NEC-63) sponsored a symposium entitled “Checkoff Promotion Response Measurement: Improving the Science and Setting Priorities.” This executive summary presents authors and abstracts of the symposium papers. Those wishing more detail will find the full papers in the fall 1999 issue of Agribusiness: An International Journal published by John Wiley. They are also available on the Wiley web site, which may be accessed at the following address:
http://www.interscience.wiley.com.

“The Science and Art of Promotion Evaluation”
George C. Davis, Texas A&M University

Over the past two decades commodity checkoff programs have proliferated. In 1996 legislation was passed that requires these programs to be evaluated at least once every five years. Because of this legislation there are now potential legal and monetary implications associated with these evaluations. Consequently, for all parties concerned two questions naturally arise: what is the scientific status of promotion evaluations? How can promotion evaluations be improved? This paper attempts to answer these questions by exploring the scientific and artistic aspects of the central activity involved in all promotion evaluations: modeling. Attention centers on the scientific assumption choice set that is available to modelers, the tradeoffs involved in making certain assumption choices, and how assumption choices may be improved in general. These ideas are discussed in the context of a sample of promotion evaluation studies.

“On Improving Econometric Analyses of Generic Advertising Impacts”
William G. Tomek and Harry M. Kaiser, Cornell University

It is possible to obtain robust estimates of structural parameters using observational data, but it is difficult to do so. Necessary, but not sufficient, conditions are to adopt a modeling philosophy and to undertake a comprehensive evaluation of the results. Using a general-to-specific modeling philosophy, we obtained stable estimates of the long-run advertising elasticity for fluid milk. This result contrasts with an earlier, published model which did not provide stable estimates as new data points became available. It is difficult, however, to apply the general-to-specific modeling approach because it requires the researcher to specify an initial general model. But analysts are unlikely to agree on this initial model, and if this is true, then the “generality” of the model is in question. Moreover, it is a fact that the quality of the available data is sometimes insufficient to obtain the desired stable estimates.

“Explaining the Differences between Two Previous Meat Generic Advertising Studies”
Nouhoun Coulibaly and B. Wade Brorsen, Oklahoma State University

United States producer organizations spend millions of dollars on generic advertising of both beef and pork and other promotion programs designed to stimulate consumers’ demand for meat. Producers need to know if the money allocated to generic advertising and these promotion programs is effective in increasing the demand for meat. Past research disagreed about the effectiveness of meat generic advertising. Models of Ward and Lambert and Brester and Schroeder are re-estimated and tested for misspecification. The Ward and Lambert model is shown to be fragile. The statistically significant effect of advertising disappears with minor changes in the data and with a change in the sample period.

"Measuring Advertising Effectiveness: An Issue of Measuring Advertising Intensity"
Chanjin Chung and Harry M. Kaiser, Cornell University

The objective of this study is to examine the impacts of alternative measures of advertising intensity on the evaluation of advertising effectiveness. This study used quarterly data of post-buy actual GRPs and corresponding advertising expenditures for the New York City fluid milk market. First, the correlation was tested between GRP and expenditure series. Then, advertising effectiveness was evaluated using these two series. Correlation tests suggested no correlation between GRP and expenditure variables was highly unlikely. The econometric analysis, however, found that the twoalternatives produced quite different advertising elasticities and rates of return. The results indicate that the choice of advertising intensity measure may provide researchers with different evaluation results.

“Evaluating the Beef Promotion Checkoff: A Reply”
Ronald W. Ward, University of Florida

Coulibaly and Brorsen’s attempt to replicate published results on beef promotion response is questioned. New results are presented to suggest that earlier estimates are sound in that inferences are not much affected by model specification or data.

“Commodity Checkoff Programs as Alternative Producer Investment Opportunities: The Case of Soybeans”
Gary W. Williams, Texas A&M University

Evaluations of commodity checkoff programs generally involve benefit-cost analyses. The typical benefit-cost approach, however, provides no clear criteria for judging whether program benefits exceeds the costs sufficiently to warrant continuation of the program. This article proposes a method for evaluating a commodity checkoff program as an alternative investment opportunity facing producers which allows a ranking of the program among investment alternatives facing producers. The procedure is demonstrated through an analysis of the soybean checkoff promotion program. The analysis clearly indicates that the soybean checkoff program has performed well as an investment alternative for soybean farmers and warrants consideration for continuation. In contrast, a benefit-cost analysis of the soybean checkoff program yields ambiguous results regarding both the magnitude of the producer benefit and whether the benefit is sufficiently large relative to cost to justify continuation of the program.