Functional Foods as Differentiated Products

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.


Issue Date:
2009-04
Publication Type:
Report
PURL Identifier:
http://purl.umn.edu/149939
Total Pages:
39
JEL Codes:
L15; L81; L25
Series Statement:
Research Report
113




 Record created 2017-04-01, last modified 2017-08-27

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