The optimal budget of Milk Generic advertising: an application of different allocation methods

Document Type : Research Paper

Author

Assistant Professor of Agricultural Economics, Sayyed Jamaleddin Asadabadi University, Asadabad, Hamedan, Iran

Abstract

Generic advertising is primarily aimed at creating demand (introduction) and promoting consumption, without mentioning a specific brand. When the target product is a strategic commodity in consumption, in addition to firms, governments invest in generic advertising for increasing consumption. One of the essential products that is effective in growing and preserving health is milk and its products. The main question of the present research is that what is the optimal milk generic advertising intensity (investment in milk advertising) and how should be allocate advertising budget. in this study, using library information and other studies, in addition to determining the optimal budget for generic advertising of milk, we examine the method of allocation, lump-sum, per unit levy, valorem levy, with matching subsidy funding arrangements in two cases of open and closed economies. The results show that the optimum advertising intensity in the closed economy in lump-sum funding arrangement, on average, was 19.42 percent, in the levy valorem levy arrangement, on average, was 30.91 percent and in levy with government allocation a subsidy was 54.30 per cent of sales. In an open economy, in lump-sum funding arrangement, the optimal advertising amount was about 10.74% and in levy's investment method, optimal advertising intensity rates was about 20.19% of sales. What is observed in these results, besides the investment method affects the level of advertising intensity; the level of international exchanges of the country also influences this index.

Keywords

References

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Iranian Journal of Agricultural Economics and Development Research
Volume 52, Issue 4
November 2021
Pages 643-662

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