اثرات بازار پویای تبلیغات عمومی لبنی

Generic advertising of fluid milk and cheese represents the principal promotional activity undertaken with the $370 million per year provided by dairy farmers and fluid milk processors. This article describes a stock-flow-feedback simulation model that includes 17 intermediate and final dairy products, short-term and long-term milk supply response and government policies that influence the impacts of generic advertising on net revenues for dairy farmers. Permanent increases in generic advertising expenditures increase net revenues for dairy farmers, with a cumulative net benefit to cost ratio of 2.8. Permanent decreases produce a larger reduction in net revenues and indicate a net benefit to cost ratio larger than 4.5. Spending a larger proportion of existing generic advertising funds on cheese rather than fluid milk would also markedly increased dairy farmer net revenues. Generic advertising increases net revenues for dairy farmers even when industry supply response and government regulation are accounted for.

A causal diagram illustrates a number of the differences between the impacts of generic and branded advertising (Fig. 1). The diagram depicts a number of balancing (B) and reinforcing (R) feedback processes associated with the impacts of generic advertising. In contrast to branded advertising, the ultimate objective of generic advertising is to increase net revenues for input suppliers (dairy farmers in this case). The mechanism for this is as follows. Generic advertising expenditures increase sales of the advertised products, which decreases inventories (a physical stock, depicted with a box in Fig. 1), increases their price, increases the net margin earned from them and stimulates additional production. Increases in production of the advertised product increase the demand for the raw input (milk) needed as an input. Increased raw input use for the manufacture of advertised products (in this case, fluid milk and cheese) decreases the availability of the raw input to manufacture non-advertised products (e.g., butter, dried milk). This reduces the available supply of non-advertised products, increasing their price. As noted above, minimum raw input price regulation exists in the US dairy industry; the minimum price paid to farmers is calculated as a function of product prices and product for which the raw input is used. An increase in the price of non-advertised products increases the minimum regulated price. The price increase for advertised products also contributes to increases in the minimum regulated price. A higher minimum regulated price increases the net revenues earned by raw input suppliers (the objective), but also increases input costs for all products. The input cost increase increases the prices of all products, which will have a dampening effect on demand.

Although numerous econometric evaluations of generic dairy advertising exist, this study is the first to apply a stock-flow-feedback systems model. This approach incorporates the complexities of milk characteristics and economic regulations of the US dairy industry. In particular, the model links milk supply response, dairy economic regulations, and pricing of all milk components to provide a more integrated and comprehensive analysis of generic advertising impacts on the industry. The analysis reaffirms the findings of other authors that generic dairy advertising is a highly profitable activity on the part of dairy farmers and milk processors. Consideration of multiple balancing feedback loop effects results in estimated cumulative net benefit–cost ratios somewhat lower than previous estimates. Furthermore, unlike previous research, the results include provide detailed time paths of the response of important endogenous variables to changes in generic fluid milk and cheese advertising. One of the more relevant findings is the interaction between changes in demand caused by advertising, milk supply response and prices. Specifically, in the very short run, changes in advertising are positively associated with changes in prices. However, over time, milk production responses significantly erode the price impacts of advertising, as indicated by patterns in both prices and net benefit cost ratios. Thus, the simplistic permanent step in expenditures approach adopted for the scenarios above could be refined to explore optimal inter-temporal allocation of advertising expenditures. The analysis of the optimal allocation of generic advertising between fluid milk and cheese indicates that dairy farmers could increase their net revenue by transferring all generic fluid milk advertising expenditures into generic cheese advertising assuming fluid milk processors continue generic fluid advertising at 2004 levels. The broader implication is that generic advertising efforts for dairy will be more effective if they increase demand for all dairy components proportional to the composition of raw milk. Nicholson and Stephenson (2006) find similar offsetting effects for promotional efforts focused on milk proteins.