Academic journal article Agricultural and Resource Economics Review

Value of Beef Steak Branding: Hedonic Analysis of Retail Scanner Data

Academic journal article Agricultural and Resource Economics Review

Value of Beef Steak Branding: Hedonic Analysis of Retail Scanner Data

Article excerpt

Consumers rely on experience and credence attributes when purchasing beef from retailers. It is essential for all beef industry sectors to recognize the complexity of consumer buying behavior. A hedonic model is estimated to determine if there are incentives to brand beef steaks, the types of brands that entertain price premiums, and the level of existing premiums. Most branded steaks garnered premiums along with organic claims, religious processing claims, and premium cuts. Factors influencing brand value were new brands targeting emerging consumer trends, brands with regional prominence, and brands positioned as special label, program/breed specific production, and store labels.

Key Words: beef steak, brand premium, hedonic modeling

(ProQuest: ... denotes formulae omitted.)

Branding of beef retail products has gained momentum in recent years. In 2004, 42 percent of beef retail products were branded, a figure that grew to 63 percent in 2010 according to the 2010 National Meat Case Study conducted jointly by The Beef Check-off, the National Pork Board, and Cryovac® (National Cattlemen's Beef Association 2010). As the potential value of differentiating and branding retail beef has become apparent, a proliferation of branding strategies has emerged. A review of retail data provided by Freshlook Marketing Group (2011) reveals that there are more than one hundred beef brands now present in U.S. retail markets.

Product differentiation and branding are especially prevalent in beef steaks. The steak market is intriguing because numerous physical attributes and marketing characteristics are being used to differentiate the product. However, there is only limited information available on the implicit value of various steak product attributes and brand labels. In this study, we use revealed preference to determine implicit prices for retail steak products associated with descriptive package-label characteristics and product brands.

This study employs a two-step analysis. A hedonic model is used to reveal implicit prices for retail steak characteristics that include both physical (e.g., retail steak cut and bone presence) and credence (e.g., brand name, breed claim, organic production claim, religious processing claim) attributes. Understanding factors that affect implicit price is also of importance. For example, a brand can be thought of as a mix of hedonic, instrumental, and price preferences that represent value to the consumer and are reasonably consistent over time (Zeithaml 1988). To that end, we use estimated brand coefficients from the hedonic price model as a dependent variable to identify the factors associated with brand premiums. Knowing how a branding initiative affects value helps to identify branding strategies that successfully target consumers. Consumers benefit from brand strategies because the brand identifies a known set of attributes at a known level of quality and generally known price range relative to similar products (Owen, Wright, and Griffith 2000). As such, product brands reduce consumers' search costs and uncertainty about product performance.

Previous Research

Previous studies have elicited various attribute values for retail beef products: eating quality (Hahn and Mathews 2007), fat content (Brester et al. 1993, Unnevehr and Bard 1993, Shongwe et al. 2007), tenderness (Feldkamp, Schroeder, and Lusk 2005, Feuz et al. 2004, Lusk et al. 2001, Platter et al. 2005), packaging (Menkhaus et al. 1992, Harrison, Harstad, and Rutstrom 2004), labeling (Loureiro and McCluskey 2000, Lusk and Fox 2002, Loureiro and Umberger 2003), organic production (Boland and Schroeder 2002), and multiple attributes and attribute bundles (Alfnes and Rickertsen 2003, Lusk, Roosen, and Fox 2003, Tonsor et al. 2005, Loureiro and Umberger 2007, Parcell and Schroeder 2007, Ward, Lusk, and Dutton 2008, Martinez 2008, Froehlich, Carlberg, and Ward 2009, Hanagriff, Rhoades, and Wilmeth 2009, Abidoye et al. …

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