Citation

Obeng K. J. Transp. Res. Forum 1988; 29(1): 50-58.

Copyright

(Copyright © 1988, Transportation Research Forum)

DOI

unavailable

PMID

unavailable

Abstract

This paper examines the relationship between sales (measured by passenger revenue), promotion and advertising expenditure, and service level (measured by speed) using data for seventy-four bus systems. A translog model modified to account for the lagged effect of promotion and advertising is specified and used. This model allows hypotheses concerning the returns to promotion and advertising to be tested. The results of the analysis show that the lagged effect of advertising is small and that there are decreasing and positive returns to promotion and advertising. Based on the marginal returns it is found that it is not in all transit systems that an increase in advertising expenditure can be justified despite positive returns. In 24.3% of the transit systems, the increased expenditure cannot be justified. Similarly, it is found that increased speed cannot be justified in 55.4% of the bus transit systems used in this study based on its impact on revenue. The implication of these findings are also examined.