Determinants of Milk Advertising Effectiveness

Abstract

Abstract An analysis of the net returns to dairy farmers from generic fluid milk advertising is made in terms of the ability of advertising to increase the blend price of milk in excess of the cost of advertising. The evaluation of the economic effectiveness of generic fluid milk advertising programs extends beyond the measurement of the direct sales response to advertising. Specifically, the class I‐class II price differential and the class I utilization rate are found to be extremely important factors influencing the effectiveness of generic milk advertising programs, while the impact of the price elasticity of supply is relatively minor.