Valuation of New Products in the Face of Consumer Income Disparity

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

No 49571, 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin from Agricultural and Applied Economics Association

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.

Keywords: compensating variation; differentiated products; distance metrics; new product valuation; retailing; Consumer/Household Economics (search for similar items in EconPapers)
Date: 2009
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