Effect of generic and brand promotions of fresh-cut flowers on the use of retail flower outlets

A generic promotion program for fresh-cut flowers and greens known as PromoFlor was implemented in late 1993 with advertising programs starting in 1996. In June 1997 the program was terminated through a scheduled voter referendum among those flower handlers subject to the checkoff assessment. While many issues can be cited that potentially contributed to the negative vote, issues centering around equity are of particular interest. Discussion about the assessment exemption level was an issue where firms with less than ;To address the outlet issue, data on household purchases of fresh-cut flowers through all types of outlets were used. Commercial data from the NPD (National Panel Diary) Group included information on several thousand households reporting details on both the quantity and expenditures on flower purchases, outlet selection, and flower type, along with a wide range of information on household profiles. Using these data, the market share for each retail outlet can be calculated and then used to determine if there is any relationship between the outlet shares and PromoFlor's activities.;Expenditure allocation models using the Almost Ideal Demand Systems (AIDS) specification were used to estimate change in the household expenditures on fresh-cut flowers among the three flower outlets, namely florists, supermarkets, and other outlets. Models were estimated for overall fresh-cut flowers, across four US regions, and across three types of fresh-cut flower products. Models were estimated using maximum likelihood procedures for seemingly unrelated regressions (SUR) and the appropriate price, income elasticities, and market share elasticities were computed. Simulations analyses were carried out to estimate the market share response function of both generic and brand promotions.;Generic promotions of fresh-cut flowers were shown to be outlet neutral in terms of household selection of retail alternatives for buying flowers. Consistent with theoretical arguments, the brand advertising of flowers contributed to a slight positive gain to the florists sector of the flower distribution system. These results follow from using AIDS models applied to four income groups. In addition to the promotional aspects of the share model, many other aspects have been presented and discussed. Among these include the price effects on outlet selection and the projections of longer term outlet shares with growth (or declines) in the total expenditures on fresh cut flowers. Also, the regional differences in responses to the national generic programs were considered and presented. This analysis is for a program that no longer exists. Yet, the insights gained from this type of analysis have important contributions to future directions in dealing with new and/or restructure checkoff programs.