Marketing Spending On The Welfare Effect Of Dairy Products Enterprise In China

2008 is the winter of dairy products in our country,a series of safety problems make consumers no longer completely trust domestic brands in China.In order to regain consumers' trust,domestic dairy enterprises have tried their best.The most striking way is increased advertising spending year by year..Since 2014,China's dairy industry marketing investment increased from 24.1 billion to 35.1 billion,but the profit only increased from 17.7 billion to 17.7 billion.Can increasing marketing investment really bring higher returns for the enterprise?If not,why dairy companies could be so attaches great importance to the marketing input?According to the research achievements of previous scholars,we can know that marketing investment will change the demand of dairy consumption,and the change will affect the quantity and price of supply and demand in each link of the dairy industry.After calculating the changes,we can find out the total amount of producer surplus variation for all companies in the dairy industry.Based on the data of dairy industry(including raw milk,liquid milk,milk powder)in China from 2010 to 2013,we can establish the corresponding equilibrium displacement model.Under the impact of exogenous variables such as marketing investment study the change when the market demand increased by 1%.Based on the relevant foreign literature,the dairy industry in China is divided into two sectors,the liquid milk department and the milk powder department,of which the liquid milk is represented as milk and yogurt.All the departments further vertically divides into the upper,middle,downstream and the corresponding consumption market,then we establishe the corresponding equilibrium movement model and assign the parameters involved in the model.Then the changes in the output and price of the products produced by the entire sector are calculated when the market demand is increased by 1%.Finally,the paper calculates the marketing input elasticity of the liquid milk and the milk powder department through the empirical method,and further calculates the surplus producer changes to the dairy enterprises brought by the total marketing input changes of 2010-2013 year.Through the research in this paper,we can draw the following conclusions:(1)the marketing investment has a significant positive effect on dairy consumption,but 1% increase in marketing investment can only lead to 0.7% of the consumption increase;(2)increase the same proportion of marketing investment,the surplus production of liquid milk accounts for 74% of the increase of marketing investment,and the milk powder only accounts for 6%.Therefore,the increase of marketing investment in the liquid milk sector is more conducive to the increase of the producer surplus than milk powder in the whole industry.