Impact of Generic Advertising for Fluid Milk on Demand for Whole, Lowfat, and Skim Milks

¹ Department of Agricultural, Resource, and Managerial Economics, Cornell University, Ithaca, NY 14853-7801

The purpose of this study was to determine whether a statistical difference exists in sales responsiveness to advertising among consumers of whole, lowfat, and skim milks. A case study for New York City was presented using data from monthly time series for demand from 1986 through 1992. Separate demand functions were estimated for whole, lowfat, and skim milks when advertising expenditures for generic fluid milk were used as one of the explanatory variables. The results indicated that long-term advertising elasticities (i.e., percentage change in per capita sales given a 1% change in generic fluid milk advertising expenditures) were 0.16, 0.19, and 0.18 for whole, lowfat, and skim milk products, respectively. These estimates were higher than previous estimates for generic fluid milk advertising elasticities in New York City. The long-term sales response to generic advertising was significant for all three fluid milk products. We concluded that generic fluid milk advertising, as currently structured, has a positive and equal impact on demand for whole, lowfat, and skim milks.

Key Words: advertising • sales • milk

Submitted on November 6, 1995
Accepted on May 31, 1996