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Valuation of New Products in the Face of Consumer Income Disparity

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  • Pofahl, Geoffrey M.
  • Richards, Timothy J.
  • Tonsor, Glynn T.

Abstract

The objective of this research is to begin exploring the welfare effects of new food product introductions and to determine whether such effects vary depending on the income classification of the customer base to which the products are introduced. In other words, when new products are introduced to both high- and low-income markets, is there a significant difference in estimated welfare effects that can be attributed to differences in consumer-base income levels? In an application involving new bottled juice introductions, we do, in fact, find notable differences in welfare effects accruing to different income-class cohorts. Our results provide important evidence of the need for an even greater understanding of new product welfare effects and how these effects vary across population groups and certain new product claims.

Suggested Citation

  • Pofahl, Geoffrey M. & Richards, Timothy J. & Tonsor, Glynn T., 2009. "Valuation of New Products in the Face of Consumer Income Disparity," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49571, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea09:49571
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    File URL: http://purl.umn.edu/49571
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    References listed on IDEAS

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    1. Joris Pinkse & Margaret E. Slade & Craig Brett, 2002. "Spatial Price Competition: A Semiparametric Approach," Econometrica, Econometric Society, vol. 70(3), pages 1111-1153, May.
    2. Geoffrey M. Pofahl & Timothy J. Richards, 2007. "Valuation of New Products in Attribute Space," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 402-415.
    3. Zhuo Chen & Steven T. Yen & David B. Eastwood, 2005. "Effects of Food Stamp Participation on Body Weight and Obesity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1167-1173.
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    Keywords

    compensating variation; differentiated products; distance metrics; new product valuation; retailing; Consumer/Household Economics;

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