The impact of promotion/advertising expenditures on citrus sales

Abstract

This study analyses the impact of advertising expenditures on citrus sales from the Texas Rio Grande Valley. A bivariate vector autoregressive model is estimated using weekly data on the dollar value of advertising expenditures and carton equivalent shipments for the 1993–1999 growing seasons. The estimated impulse response functions show that a one-time increase in advertising expenditures leads to increases in orange sales with a one-month lag. However, the impact of advertising on grapefruit sales is more immediate and relatively large. Carton shipments remain high for about three weeks after a one-time advertising shock. There is also no evidence of causality from sales to advertising. The results suggest that Federal Marketing Order regulations that facilitate funds for the promotion and advertising of citrus are effective in increasing the domestic consumption of oranges and grapefruit.