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Spatial Retail Pricing Strategies For Beer In Germany

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  • Empen, Janine
  • Glauben, Thomas
  • Loy, Jens-Peter
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    Abstract

    The market for beer in Germany is special for many reasons, e.g. the purity law, the large number of breweries, or consumers who are highly loyal to local brands. To what extent brand loyalty affects spatial pricing strategies, is the main question of this article. We employ weekly retail scanner data for Germany from 2000 to 2001. We find that discounts are higher and offered more often the closer the brands are sold to the brewery they originate from. In addition, average prices are also lower on home markets. According to Anderson and Kumar (2007) this strategy is chosen because promotions generate new loyal customers who repay in periods of regular prices. Thus, loyalty of consumers may be endogenous. Alternatively, retailers use local beer brands as loss leaders, which can also explain the observed regional pricing strategies.

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    Bibliographic Info

    Paper provided by German Association of Agricultural Economists (GEWISOLA) in its series 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 with number 137150.

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    Date of creation: 2012
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    Handle: RePEc:ags:gewi12:137150

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    Related research

    Keywords: Spatial Pricing; Regional Brands; Brand Loyalty; Beer; Germany; Räumliche Preissetzung; Regionale Marken; Markentreue; Bier; Deutschland; Agricultural Finance; Consumer/Household Economics; Food Consumption/Nutrition/Food Safety; Marketing;

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    1. Margaret E. Slade, 2004. "Market Power and Joint Dominance in U.K. Brewing," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 133-163, 03.
    2. Eric Anderson & Nanda Kumar, 2007. "Price competition with repeat, loyal buyers," Quantitative Marketing and Economics, Springer, vol. 5(4), pages 333-359, December.
    3. William James Adams, 2006. "Markets: Beer in Germany and the United States," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 189-205, Winter.
    4. Daniel Hosken & David Reiffen, 2001. "Multiproduct retailers and the sale phenomenon," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 115-137.
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