@article{Herrmann:98115,
      recid = {98115},
      author = {Herrmann, Roland and Moser, Anke and Werner, Elke},
      title = {Neue empirische Befunde zur Preissetzung und zum  Verbraucherverhalten im Lebensmitteleinzelhandel},
      journal = {German Journal of Agricultural Economics},
      address = {2002},
      number = {670-2016-45600},
      pages = {13},
      year = {2002},
      abstract = {There are two objectives of this article: (i) It is  discussed theoretically
how the dynamics of pricing  decisions of multiproduct retailers can be explained. (ii)  It is analyzed empirically by use of
scanner data how  prices are actually set and how consumers react
at the  point of sale to price changes and promotional activities  by
retailers. The empirical evidence focuses on breakfast  products in
general and jam and breakfast cereals in  particular. Main results are
the following:
1. Theory of  optimal pricing by multiproduct firms suggests that
direct  and cross price elasticities of demand and marginal  costs
determine the profit-maximizing price at one point of  time. Good
reasons do exist additionally for multiproduct  retailers to vary
prices intertemporally. Sales, e.g., can  be consistent with optimal
intertemporal pricing.
2.  Scanner data for German food retailers in the period  September
1996 – June 1999 are utilized in the empirical  analysis. The law of
one price does not hold for individual  branded foods across
store types. Price dispersion varies  by product. The impact of
sales is high in grocery  retailing; on average for 20 food categories,
one product  of a category was on sale every other week.
3. Promotional  activities affect demand for branded products
strongly, but  impacts on quantities varied widely. They were
above  average for coffee, a storeable product, below average  for
fresh milk, a less storeable good. In some cases, these  effects
are so strong that consumers seem to buy the brand  only when it
is on sale.
4. In the special case of jam,  prices are lowest in discounters and
highest in  supermarkets. The spread of prices is also lowest  in
discounters and highest in supermarkets. Price-elastic  reactions
at the point of sale was, however, a uniform  pattern across all
store types of grocery retailing. The  strongest reaction was
found in supermarkets with a price  elasticity of demand of –5.09.
5. For breakfast cereals,  strong reactions by consumers occur to
various promotional  activities. Impacts on demand were, e.g., as
high as 175 %  when the instruments sales, display and leaflet
were  combined. Sales were an important feature of  promotional
activities with a strong demand-increasing  effect.
Summing up, it can be concluded that an active  price policy of
grocery retailers is a crucial component of  their marketing mix. This
is compatible with the finding of  a strong price responsiveness of
consumers. The stylized  fact that the price elasticity of food demand
is absolutely  low, may be correct for aggregate demand but is  not
confirmed at the store level. On the contrary: High  absolute levels of
the store-level price elasticity of  demand are typical for branded
foods.},
      url = {http://ageconsearch.umn.edu/record/98115},
      doi = {https://doi.org/10.22004/ag.econ.98115},
}