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Functional Foods as Differentiated Products

Author

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  • Alessandro Bonanno

    () (University of Connecticut)

Abstract

In spite of growing consumers’ interest for functional foods and strong growth of their markets, limited knowledge of the demand for these products and their profitability is available. Adapting the LA/AIDS model by means of Pinkse, Slade, and Brett’s (2002) distance metric method, this article assesses the demand, substitution pattern, and profitability of conventional and functional alternatives inside the yogurt category in the Italian market. Results indicate that functional alternatives’ demand is often less elastic than conventional ones’, that brand loyalty plays a key role, and that 25% of the profitability of functional yogurts comes from the functional attribute itself.

Suggested Citation

  • Alessandro Bonanno, 2009. "Functional Foods as Differentiated Products," Food Marketing Policy Center Research Reports 113, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
  • Handle: RePEc:zwi:fpcrep:113
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    File URL: http://fmpc.uconn.edu/publications/rr/rr113.pdf
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    More about this item

    Keywords

    Functional Foods; Differentiated Products; Distance Metric; Yogurt;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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