An empirical study into the relationship between advertising density, market share and sales profit in the dairy industry

 

He Yucheng¹*, Cao Shuang¹, Zhang Qian and Bai Rui²

 

Research Article | Published November 2015

Journal of Economics and International Business Management, Vol. 3(2), pp. 40-45.

 

¹Department of Management, College of Economics and Management, Huazhong Agricultural University, Wuhan, 430070, China.
²Foreign Economic Cooperation Center, Ministry of Agriculture, 100125, China.

 

*Corresponding author. E-mail: hych@mail.hzau.edu.cn.

 

…………………………………………………………………………………………………......................……

 

View Full Text - PDF

 

Many enterprises in the dairy industry have made significant investments into advertising to expand market share and profits. However, the effectiveness of this strategy has not been fully investigated and further study is needed. In this paper, an empirical study is the relationship between advertising density, market share and sales profit in the dairy industry. The research sample consisted of Yeale, Bright Dairy, Wei Wei Dairy and San Yuan Dairy. Relevant data was collected from these dairy enterprises and the wider industry from 2002 to 2011. Unit root tests, co-integration tests and a vector auto-regression model were used to analyze the bidirectional relationship between advertising density, market share and sales profit. Previous advertising density was positively correlated with advertising density, market share and sales profit in the current period. Moreover, previous market share was positively correlated with current advertising density and market share but was negatively correlated with current sales profit. Finally, previous sales profit was negatively correlated with current advertising density but positively correlated with current market share and sales proft.

 

Keywords: Advertising density, market share, sales profit rate, bidirectional relationship.