Abstract

An important feature of agribusiness promotion programs is their lagged impact on consumption. Efficient investment in advertising requires reliable estimates of these lagged responses and it is desirable from both applied and theoretical standpoints to have a flexible method for estimating them. This note derives an alternative Bayesian methodology for estimating lagged responses when investments occur intermittently within a time series. The method exploits a latent-variable extension of the natural-conjugate, normal-linear model, Gibbs sampling and data augmentation. It is applied to a monthly time series on Turkish pasta consumption (1993:5-1998:3) and three, non-consecutive promotion campaigns (1996:3, 1997:3, 1997:10). The results suggest that responses were greatest to the second campaign, which allocated its entire budget to television media; that its impact peaked in the sixth month following expenditure; and that the rate of return (measured in metric tons additional consumption per thousand dollars expended) was around a factor of 20.

Submitted: December 22, 2003 · Accepted: January 28, 2004 · Published: February 19, 2004

Recommended Citation

Holloway, Garth J. and Aydogus, Osman (2004) "Promotion Carryover as a Missing-Data Problem," Journal of Agricultural & Food Industrial Organization: Vol. 2 : Iss. 1, Article 4.
DOI: 10.2202/1542-0485.1053
Available at: http://www.bepress.com/jafio/vol2/iss1/art4