nep-mkt New Economics Papers
on Marketing
Issue of 2014‒06‒28
seven papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  2. Supermarket Promotions and Food Prices By Lan, H.; Lloyd, T. A.; Morgan, C. W.
  3. Consumer willingness to pay for genetically modified potatoes in Ireland: an experimental auction approach By Thorne, F.; Loughran, D.; Fox, S.; Mullins, E.; Wallace, M.
  4. Retail Pricing Patterns and Driving Factors of Price Variation By Li, Chenguang; Volpe, Richard
  5. Borrowing on the Wrong Credit Card: Evidence from Mexico By Alejandro Ponce; Enrique Seira; Guillermo Zamarripa      
  6. Consumer Attitudes and the Epidemiology of Inflation Expectations By Michael Ehrmann; Damjan Pfajfar; Emiliano Santoro
  7. Demand for carbon-neutral food – evidence from a Discrete Choice Experiment for milk and apple juice By Breustedt, Gunnar

  1. By: Loy, Jens-Peter; Holm, Thore; Steinhagen, Carsten; Glauben, Thomas
    Abstract: In food retailing a high degree of static price dispersion between and within stores and between brands has been documented, but at the brand and/or retail outlet level the dynamic behaviour of prices, as well as its causes, have not been analysed in the European food market context. In this paper we estimate the dynamic pricing behaviour of brands at various retail outlets to identify the role of private (low-price brands) and national (high-price brands) labels to explain the dispersion of retail price dynamics. The results indicate significant asymmetries in cost pass-through processes, which vary between brands and outlets. In particular, private labels (low-price brands) adjust prices faster than national labels (high-price brands). Moreover, cost pass-through is slightly more (positive) asymmetrical for private labels than for high-price national brands.
    Keywords: Cost Pass-Through, Panel Threshold Error Correction Model, Dairy, Retail Market, Germany, Demand and Price Analysis, International Relations/Trade, Livestock Production/Industries, Marketing, C32, D21, L11, L81,
    Date: 2014–04
  2. By: Lan, H.; Lloyd, T. A.; Morgan, C. W.
    Abstract: Using a sample comprising nearly a quarter of a million weekly prices from the largest seven supermarket chains in the UK, we present statistical evidence on two pricing practices that have attracted public interest. Analysing price dynamics before and after periods of promotional discounting the investigation finds first, no evidence of a general tendency for sales to disguise rises in the regular price, and second, some evidence for prices to rise prior to sales in a manner that is consistent with the exaggeration of the discount. As such, the results parallel the competition authority’s view of supermarkets use of promotions and also point to the useful contribution that retail price microdata might play in keeping prices in check.
    Keywords: supermarket promotion, food prices, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Marketing, L16, L66, E30,
    Date: 2014–04
  3. By: Thorne, F.; Loughran, D.; Fox, S.; Mullins, E.; Wallace, M.
    Abstract: The introduction of genetically modified (GM) crops to Europe has been a significant source of tension among EU member states. While the political landscape is much divided there is also much unknown at the consumer level. The question of whether European consumers want GM foods made available to them or not has yet to be answered definitively. Hence, this research is considered timely; the objective is to examine willingness to pay (either a positive or negative amount) for GM Late Blight resistant (GMLBR) potatoes in Ireland. The methods used in this study serve as a new departure in the experimental auctions literature, whereby willingness to purchase bids for a new technology can have a positive and negative value in a single experiment. The results show that the majority of consumers’ that participated in the experiment derived a greater utility from the conventional potato product compared to the GM potato product when priced at equivalent values. 3 out of 4 participants required the GM product to be priced at a discount in order for the utility to be derived from the GM product to be the same as the utility derived from the conventional product. However, the findings from this research would indicate that if the entry price point for the GMLBR potato product was correctly positioned then a market for the product could exist. Further investigation of the factors that influenced the participants’ willingness to purchase the GMLBR potato indicated that education level, presence of children in the household and frequency of potato purchases significantly affected the purchase decision.
    Keywords: Crop Production/Industries, International Relations/Trade, Political Economy, Research and Development/Tech Change/Emerging Technologies,
    Date: 2014–04
  4. By: Li, Chenguang; Volpe, Richard
    Abstract: This study explores the strategic pricing behaviors across retail chains for produce products. We adopt a Panel-VAR model to identify the driving factors of retail price variation and find that retail price history, competition, product cost are among the key drivers of retail price change. Forecast Error Variance Decomposition (FEVD) is used to quantify the relative impact of driving factors to retail price changes and show how they affect prices differently across retail chains. We also find that higher responsiveness to competition may indicate superior management ability in price setting that associates with better profitability in practice.
    Keywords: Retail Pricing Strategy, Price Driver, Panel-VAR, Retail Competition, Demand and Price Analysis, Production Economics, Research Methods/ Statistical Methods, Q11, Q13,
    Date: 2014–04
  5. By: Alejandro Ponce; Enrique Seira; Guillermo Zamarripa      
    Abstract: We study how consumers allocate debt across credit cards they already hold using new data on credit card activity for a representative sample of consumers with two homogeneous cards in Mexico. We find that relative prices are a very weak predictor of the allocation of debt, purchases, and payments. On average, consumers pay 31% above their minimum financing cost. Evidence on cross-card debt elasticities with respect to interest rates and credit limits show no substitution in the price margin. Our findings offer evidence against the cost-minimizing hypothesis and provide support to behavioral explanations.
    Keywords: Credit cards, household finance, consumer behavior, Mexico
    JEL: D12 D14 D40 G02 G20 G28
    Date: 2014–02
  6. By: Michael Ehrmann; Damjan Pfajfar; Emiliano Santoro
    Abstract: This paper studies the formation of consumers’ inflation expectations using micro-level data from the Michigan Survey. It shows that beyond the well-established socio-economic determinants of inflation expectations such as gender, income or education, other characteristics such as the households’ financial situation and their purchasing attitudes also matter. Respondents with current or expected financial difficulties, pessimistic attitudes about major purchases, or expectations that income will go down in the future have considerably higher forecast errors, are further away from professional forecasts, and have a stronger upward bias in their expectations than other households. However, their bias shrinks by more than that of the average household in response to increasing media reporting about inflation.
    Keywords: Inflation and prices
    JEL: C53 D84 E31
    Date: 2014
  7. By: Breustedt, Gunnar
    Abstract: To internalize climate-related external costs from agricultural production and food consumption Pigou taxes and carbon credits increase private costs for food. Voluntary consumer choices for carbon-neutral food can be advantageous over such policy measures since they avoid higher food prices for the poor. We empirically analyze consumers’ willingness-to-pay for hypothetical carbon-reduced as well as carbon-neutral milk and apple juice. Data are collected in Discrete Choice Experiments in a German supermarket. Estimates reveal a substantial price premium for the carbon-neutral products which is probably sufficient to cover the products’ extra costs, including the purchase of carbon credits. The premiums are around 0.20 € per liter milk and 0.30 € per liter apple juice. Although the external validity of stated-preference methods is limited the willingness-to-pay measures for organic milk and juice as well as for different real-world labels in our experiment are similar to real-world price premiums.
    Keywords: climate change, carbon-neutral food, discrete-choice-experiment, Consumer/Household Economics, Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, Q54, Q130, Q180,
    Date: 2014–04

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