On the Estimation of Advertising Effects for Branded Products: An Application to Spaghetti Sauces

Oral Capps, Seong-Cheon Seo and John P. Nichols

Journal of Agricultural and Applied Economics, 1997, vol. 29, issue 2, 291-302

Abstract: Using IRI Infoscan data pertaining to six types of spaghetti sauces and employing an extension of the demand systems framework developed by Duffy, estimates are obtained of own-price, cross-price, and total expenditure elasticities as well as own- and crossproduct advertising elasticities. We augment the Duffy model through the use of a polynomial inverse lag mechanism to deal with the carryover effects of advertising. We also account for the impacts of features in newspaper fliers, in-store displays, and coupons. Advertising efforts by industry leaders in spaghetti sauce produce positive own-advertising elasticities (ranging from .000058 to .0168) and negative cross-advertising elasticities (ranging from –.000003 to –.0094). Own-price elasticities are in the elastic range, and nearly all compensated cross-price effects are positive, indicative of Hicksian substitutes.

Date: 1997
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Journal Article: ON THE ESTIMATION OF ADVERTISING EFFECTS FOR BRANDED PRODUCTS: AN APPLICATION TO SPAGHETTI SAUCES (1997)
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