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Assessing the Demand for a Functional Food Product: Is There Cannibalization in the Orange Juice Category?

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Author Info

  • Yuan, Yan
  • Capps, Oral, Jr.
  • Nayga, Rodolfo M., Jr.

Abstract

The demand for functional foods has increased notably in recent years due to growing consumer interest in diet and health issues. Currently, the food industry is introducing many types of new food products with functional attributes. Consequently, cannibalization is a critical issue for firms that offer multiple products within a certain product category. The identification and assessment of cannibalization are integral factors when making strategic decisions about new product introductions. Using scanner data from Information Resources, Inc. (IRI), pertaining to a particular functional food, namely a phytosterol-enriched product for orange juice, we find that no cannibalization effects exist with respect to its introduction. We also provide estimates of own-price and cross-price elasticities of the orange juice category using a synthetic demand system.

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Bibliographic Info

Article provided by Northeastern Agricultural and Resource Economics Association in its journal Agricultural and Resource Economics Review.

Volume (Year): 38 (2009)
Issue (Month): 2 (October)
Pages:

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Handle: RePEc:ags:arerjl:55558

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Web page: http://www.narea.org/
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Related research

Keywords: functional foods; phytosterols; orange juice industry; cannibalization; synthetic demand system; Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Marketing;

References

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  1. K. Sridhar Moorthy & I. P. L. Png, 1992. "Market Segmentation, Cannibalization, and the Timing of Product Introductions," Management Science, INFORMS, vol. 38(3), pages 345-359, March.
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  5. Kai-Lung Hui, 2004. "Product Variety Under Brand Influence: An Empirical Investigation of Personal Computer Demand," Management Science, INFORMS, vol. 50(5), pages 686-700, May.
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  7. Singletary, Keith W. & Morganosky, Michelle A., 2004. "Functional Foods: Consumer Issues And Future Challenges," Journal of Food Distribution Research, Food Distribution Research Society, vol. 35(01), March.
  8. Carpenter, Gregory S. & Hanssens, Dominique M., 1994. "Market expansion, cannibalization, and international airline pricing strategy," International Journal of Forecasting, Elsevier, vol. 10(2), pages 313-326, September.
  9. Maynard, Leigh J. & Narayanan, V. Venkat, 2002. "Price Sensitivities For U.S. Frozen Dairy Products," 2002 Annual meeting, July 28-31, Long Beach, CA 19781, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Mancino, Lisa & Kuchler, Fred & Leibtag, Ephraim, 2008. "Getting consumers to eat more whole-grains: The role of policy, information, and food manufacturers," Food Policy, Elsevier, vol. 33(6), pages 489-496, December.
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  12. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-83, June.
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Cited by:
  1. Widenhorn, Andreas & Salhofer, Klaus, 2012. "Price sensitivity within and across retail formats," Congress Papers 124108, Italian Association of Agricultural and Applied Economics (AIEAA).
  2. Dharmasena, Senarath & Capps, Oral, Jr., 2010. "On Taxing Sugar-Sweetened Beverages to Combat the Obesity Problem," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61322, Agricultural and Applied Economics Association.

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