| The Winter Pear Control Committee (WPCC) is a federal marketing order that has authority to collect revenues from winter pear growers and use part of the money to promote pears. The WPCC is interested in how effectively promotional money has been spent. Examining grower returns in several dimensions will give the WPCC information about historical promotion effectiveness and information about how to allocate future promotion expenditures. This is analogous to portfolio theory where promotion dimensions are investments in a "portfolio" and the WPCC chooses the dimensions with the highest return.;There are several promotion dimensions examined in this research: promotion type, geographic location, and time. Promotion types examined are magazine ads, billboard and bus signs, newspaper advertisements, and in-store demonstrations. There are eleven geographic regions that exhaustively partition the lower 48 states. The timing is examined across months in the crop marketing year and across years in the study period. Also included are results from simulated changes in historical promotion levels.;To estimate grower returns, a wholesale demand equation and a wholesale level to FOB level price linkage equation were estimated in each region. Nonparametric regression techniques were used for the demand equations while OLS was used for the price linkage equations. The estimated coefficients from the price linkage equations and from the demand equations were combined to create point estimates of grower returns to promotion.;Confidence intervals were created for the geographic, promotion type, and some of the time dimensions. These were calculated by parametrically bootstrapping the coefficients from the price linkage equations and bootstrapping the demand equation data set. The resulting bootstrapped coefficients were then combined to replicate grower returns.;The results show significant variations in grower returns to promotion across region, promotion type, and time dimensions. This suggests that the WPCC can increase the overall return on investment in promotion by marginally reallocating promotion to those regions, promotion types, and times with the highest returns. |
