Valuation of New Products in the Face of Consumer Income Disparity

Project: Research project

Description

Understanding the determinants of consumer food choices has always been complicated by constant change in the marketplace. On the demand-side, the ever changing status of age distribution, educational attainment, immigtation rates, and other cultural phenomena means that food choice determinants and consequences will continue to be difficult to pin down. Likewise, on the supplyside, increased competition has led to alternative retail formats, consolidation, production efficiencies and gteater pressure to provide distinct products and shopping experiences that will secure consumer loyalty. While much has been written about relationships between and amongst these market changes, we are not aware of any research that explores potential linkages between two contemporary issues of notable importance: (1) the widening income gap between rich and poor U.S. households, and (2) the changing rate of new food product introductions that are characterized by specific health claims. Thus, the overall goal of the research project is to explore 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. Supporting objectives are: (1) to produce an overview of new product introductions with specific health claims and to explore whether these products are similarly distributed across market areas of low and high income consumer groups, and (2) to identify healthy and unhealthy products that have been introduced to both low and high income areas and to estimate the consumer and producer welfare effects associated with those introductions. In summary, the project proposes to fiod answers to the following series of research questions: (i) Which regularly shopped food product categories are the most/least active in terms of new product introductions that carry health-related claims? (ii) What is the general nature of health claim activities across these product categories? (iii) How do answers to (i) and (ii) depend, if at all, on differences in customer-base income levels across a market area? (iv) What are the consumer and producer welfare effects associated with new product introductions in each category? (v) In categories with new products introduced to both high- and low-income markets, is there a significant difference in estimated welfare effects that can be attributed to differences in consumerbase income levels? (vi) Is there empirical evidence to suggest that low-income consumers do, in fact, benefit from new product introductions that carry health related claims? (vii) Is there empirical evidence suggesting that retailers do not financially benefit from "healthy" new product introductions to stores that serve low-income shoppers? and (viii) What implications do our fiodings have for USDA's food assistance and nutrition programs?
StatusFinished
Effective start/end date11/24/0810/31/10

Funding

  • USDA: Economic Research Service: $99,971.00

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New product introduction
New products
Income disparity
Income
Welfare effects
Health claims
Food products
Low income
Food choice
Product category
Income level
Empirical evidence
Product introduction
Health
Educational attainment
Consolidation
Retailers
Production efficiency
Household
Nutrition