Monday, June 27, 2011
Posted by D. Daniel Sokol
Sungill Han, Department of Livestock Business and Marketing Economics Konkuk University, Chanjin Chung Department of Agricultural Economics, Oklahoma State University, and Daeseok Suh Korean Rural Economic Institute explore Generic Advertising in Concentrated and Differentiated Agricultural Markets.
ABSTRACT: This study develops an analytical framework to examine the impact of generic advertising on brand advertising with alternative assumptions on demand changes (shift-up and rotation), product differentiation, market concentration, and relationship between commodity and brand advertising programs. The newly developed model allows one to determine the relationship between generic and brand advertising, which has not been clearly shown in previous studies. Analytical results show that when generic advertising leads to an inelastic demand, generic advertising would help brand advertising and could decrease the optimal brand advertising expenditures. However, when generic advertising leads to an elastic demand, it would negatively affect the profitability of brand advertising.