An econometric study of producer sponsored promotion for pig-meat in New Zealand

Abstract

In the last decade, in an attempt to overcome the many unique and varied problems faced by New Zealand's primary product industries, statutory Boards, mainly representing producer interests, have increased the levels of promotional support for their products, particularly those destined for the domestic market.

This escalation of industry sponsored promotion has not been matched by research efforts to accurately measure the benefits that many have claimed result from such promotional efforts.

This study, through the use of econometric techniques, attempts to measure the effect of industry promotion on demand for pig-meats in New Zealand over the last decade.

The consumption of pig-meat is modelled through the use of both sales and market share functions, before and after significant levels of industry sponsored promotion, in an attempt to identify any changes in consumer purchasing behaviour that may have resulted. This is in contrast to many overseas studies which have directly estimated the actual promotional response function.

The results lead to the conclusion that little evidence could be found to support the hypothesis that product group promotion has significantly increased the consumption of pig-meat in New Zealand. However, this must be classified as a preliminary result and the study makes detailed recommendations about further research which would lead to better management of the promotion programme.