An Economic Analysis of Consumers' Purchasing Behavior for Breakfast Cereals

Consumer price sensitivity is an issue of concern for most food marketers. This study uses 2006-2007 supermarket scanner data to estimate the price sensitivity of four groups of shoppers: higher-income, moderate-income , lower-in­ come, and rural dwellers. Economic theory is used to hypothesize price sensitivity for three of these groups of shoppers. Higher-income shoppers are expected to show the highest level of price sensitivity for national brands and lower-in­ come shoppers are expected to show the lowest level of price sensitivity for these brands. Price sensitivity for rural dwellers is not hypothesized, but the level of income for these dwellers is between that of moderate- and lower-income shoppers. The results for national brands of cereals show own-price elasticities for moderate-income, lower-income, and rural shoppers to be larger (absolute value) than those for higher-income shoppers; these relationships do not hold for private label brands . Furthermore, private label brands are shown to be strong substitutes for national brands, but national brands are weak substitutes for private label brands.

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Journal of Food Distribution Research, 41, 1
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 Record created 2017-04-01, last modified 2019-08-29

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