nep-mkt New Economics Papers
on Marketing
Issue of 2012‒07‒08
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. The economic potential for an origin based marketing and certification system for a meat product in South Africa: Perceptions, preferences, and experiments. By Kirsten, Johann F.; Vermeulen, Hester; Van Zyl, Karlien; Du Randt, Gerrie; Du Plessis, H.; Weissnar, Tessa
  2. Price dispersion, search costs and consumers and sellers heterogeneity in retail food markets. By Anania, Giovanni; Nistico, Rosanna
  3. Multimarket Contact, Bundling and Collusive Behavior By Juan-Pablo Montero; Esperanza Johnson

  1. By: Kirsten, Johann F.; Vermeulen, Hester; Van Zyl, Karlien; Du Randt, Gerrie; Du Plessis, H.; Weissnar, Tessa
    Abstract: The difference between hypothetical and real values when evaluating consumers’ preferences (termed ‘hypothetical bias’) has received significant attention in scientific literature, as the outcome of this bias is often an overestimation of willingness to pay (WTP) values. This is the main focus of this paper as we unpack South African consumers’ perceptions and preferences for an origin based meat product through a set of different methodologies. These different approaches (sensory analysis, perception analysis, conjoint analysis, experimental auction and an in-store experiment) are all employed to illustrate the ‘hypothetical bias’ but also to establish beyond any doubt the market potential for a specific origin based meat product and also to test the consumers’ willingness to pay a premium, and the range of the premium obtained from different methodologies. This paper presents the results of a number of studies applying different methods related to the same product but with different groups of consumers in different locations. The different results suggest that there is sufficient evidence that suggest that the regional identity of the product is important. It is further also evident that the various willingness to pay estimates presented different results. It is however clear that the stated preference methods confirm the hypothesis that consumers recognise the reputation of the product and will be willing to pay premium. This conclusion is strengthened by the positive results from the stated preference methods (the experimental auction and in-store experiment). Together these results present a strong case for the marketing potential of origin based mutton / lamb which could sell at a price premium similar or slightly higher than comparable existing luxury and niche lamb brands on the South African market.
    Keywords: Meat of Origin, willingness to pay, consumer perceptions, experimental economics, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Marketing, Agriucltural Marketing, Food Policy,
    Date: 2012
  2. By: Anania, Giovanni; Nistico, Rosanna
    Abstract: Price dispersion, i.e. a homogeneous product being sold at different prices by different sellers, is among the most replicated findings in empirical economics. The paper assesses the extent and determinants of spatial price dispersion for 14 perfectly homogeneous food products in more than 400 retailers in a market characterized by the persistence of a large number of relatively small traditional food stores, side by side large supermarkets. The extent of observed price dispersion is quite high, suggesting that monopolistic competition prevails as a result of the heterogeneity of consumers and services offered. When prices in an urban area (where the spatial concentration of sellers is much higher and consumer search costs significantly lower) are compared with those in smaller towns and rural areas, differences in search costs and the potentially higher degree of competition do not yield lower prices; quite the contrary, they are, on average, higher in the urban area for 11 of the 14 products considered. Supermarkets proved to be often, but not always, less expensive than traditional retailers, although average savings from food shopping at supermarkets were extremely low. Finally, the results of the study suggest that retailers have different pricing strategies; these differences emerge both at the firm level and for supermarkets within the same chain. The results presented in the paper suggest that what is important in explaining price dispersion is the contemporaneous heterogeneity of retailers (in terms of services) and consumers (in terms of search and shopping preferences), which makes it possible for a monopolistic competition structure of the market to emerge and for small traditional food retailers to remain in business.
    Keywords: price dispersion, retail pricing, food markets., Agribusiness, Consumer/Household Economics, Demand and Price Analysis, Industrial Organization, L81, D83, D43, Q13.,
    Date: 2012
  3. By: Juan-Pablo Montero; Esperanza Johnson
    Abstract: We study the static and dynamic implications of non-linear pricing schemes (i.e., bundling) for otherwise unrelated products but for multimarket contact. Bundling is always present in competition but unlikely in a cartel agreement. Although it brings extra profits to the cartel –sometimes charging a premium rather than a discount for the bundle–, bundling makes deviation from the agreement far more attractive. Depending on the correlation of consumers’ preferences, this deviation effect is either reinforced with milder punishments (for positive correlations) or partially offset with harsher punishments (for negative correlations). The deviation effect is so strong that it even dominates a zero-profit (pure-bundling) punishment.
    Keywords: multimarket contact, conglomerate merger, bundling, collusion
    JEL: L13 L41
    Date: 2012
  4. By: Salazar-Ordonez, Melania; Rodriguez-Entrena, Macario
    Abstract: Applying gene technology in agricultural production, which results on the so-called genetically modified (GM) foods, is one of the most controversial scientific, political and social debates. In the EU, the underdevelopment of biotech crops is attributed to the social distrust in transgenic food. The potential consumers’ reactions towards Genetically Modified (GM) food influence the commercial feasibility and determine the economic agent decisions. This paper studies the underlying factors involved in determining consumers’ choice behaviour towards GM foods, examining the potential role of people literacy what is an issue barely studied by literature. The research is performed in Southern Spain using variance-Structural Equation Modelling, Partial Least Squares (PLS) technique. The results indicate that perceived risks and benefits from GM food act as antecedent of consumers’ purchase decisions and some differences are found in the patterns of behavioural intentions between scientific-technical literacy and social-humanistic literacy group.
    Keywords: Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, GM food, Consumers’ purchase intentions, People literacy, Partial Least Squares,
    Date: 2012

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