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Some observations on the impact of advertising on demand
Author(s) -
Lee JonqYing,
Brown Mark G.,
Fairchild Gary F.
Publication year - 1989
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/1520-6297(198911)5:6<607::aid-agr2720050606>3.0.co;2-i
Subject(s) - advertising , economics , product (mathematics) , monotonic function , scaling , recall , function (biology) , econometrics , microeconomics , business , mathematics , psychology , mathematical analysis , geometry , evolutionary biology , cognitive psychology , biology
This article examines the decay structure of advertising and the incorporation of advertising in systems of demand equations by scaling and translating methods. Under the assumption that a consumer's purchase of an advertised product is directly related to his/her recall of a specific advertisement, the decay effect of advertising for everyday products is a monotonic decreasing function of time. In the scaling model, advertising has a tendency to be more effective when demand is price elastic (inelastic) given a quantity augmenting (diminishing) type scaling impact. In the translating model, the impact of advertising is related to the marginal propensity to consume.