Pricing Strategies of Food Retailers

2020 ◽  
Vol 12 (1) ◽  
pp. 87-110 ◽  
Author(s):  
Stephen F. Hamilton ◽  
Jura Liaukonyte ◽  
Timothy J. Richards
Keyword(s):  
Consumer Search ◽  
Pricing Strategies ◽  
Price Fairness ◽  
Market Outcomes ◽  
Vertical Relationships ◽  
Food Retailers ◽  
Slotting Allowances ◽  
Farm Product ◽  
Pass Through ◽  
Market Foreclosure

Studies examining pricing outcomes in the food retail industry are complicated both by the multiproduct nature of transactions and by the presence of highly concentrated food processing and retailing industries that mediate between relatively competitive farm product markets and the consumer market. In this review, we examine theoretical and empirical evidence for retail pricing and the vertical relationships that have emerged among retailers, food manufacturers, and farmers. We first focus our analysis on consumer behavior in multiproduct retail markets, including consumer search, habit formation, and reference pricing, and then discuss retail market outcomes for price discrimination, price fairness, and price obfuscation. We then turn to relationships between retailers and food manufacturers through bargaining outcomes, market foreclosure, and slotting allowances, and discuss the resulting implications for retail-price pass-through.

scholarly journals Farm Product Prices, Redistribution, and the Early U.S. Great Depression

2021 ◽  
pp. 1-39
Author(s):  
Joshua K. Hausman ◽  
Paul W. Rhode ◽  
Johannes F. Wieland
Keyword(s):  
Great Depression ◽  
Propagation Mechanism ◽  
Farm Product ◽  
Retail Prices ◽  
Marginal Propensity ◽  
Pass Through

We argue that falling farm product prices, incomes, and spending may explain 10–30 percent of the 1930 U.S. output decline. Crop prices collapsed, reducing farmers’ incomes. And across U.S. states and Ohio counties, auto sales fell most in crop-growing areas. The large spending response may be explained by farmers’ indebtedness. Reasonable assumptions about the marginal propensity to spend of farmers relative to nonfarmers and the pass-through of farm prices to retail prices imply that the collapse of farm product prices in 1930 was a powerful propagation mechanism worsening the Depression.

scholarly journals Beliefs and Consumer Search in a Vertical Industry

2019 ◽  
Vol 18 (5) ◽  
pp. 2359-2393 ◽  
Author(s):  
Maarten Janssen ◽  
Sandro Shelegia
Keyword(s):  
Low Cost ◽  
Search Costs ◽  
Retail Price ◽  
Consumer Search ◽  
Common Assumption ◽  
Vertical Relations ◽  
Retail Prices ◽  
The Common ◽  
Search Market ◽  
Pass Through

Abstract This paper studies vertical relations in a search market. As the wholesale arrangement between a manufacturer and its retailers is typically unobserved by consumers, their beliefs about who is to be blamed for a price deviation play a crucial role in determining wholesale and retail prices. The common assumption in the consumer search literature is that consumers exclusively blame an individual retailer for a price deviation. We show that in the vertical relations context, predictions based on this assumption are not robust in the sense that if consumers hold the upstream manufacturer at least partially responsible for the deviation, equilibrium predictions are qualitatively different. For robust beliefs, the vertical model can explain a variety of observations, such as retail price rigidity (or, alternatively, low cost pass-through), nonmonotonicity of retail prices in search costs, and (seemingly) collusive retail behavior. The model can be used to study a monopoly online platform that sells access to final consumers.

scholarly journals Pass‐Through and Consumer Search: An Empirical Analysis

2014 ◽  
Vol 96 (4) ◽  
pp. 1049-1069 ◽  
Author(s):  
Timothy J. Richards ◽  
Miguel I. Gómez ◽  
Jun Lee
Keyword(s):  
Empirical Analysis ◽  
Consumer Search ◽  
Pass Through

Dynamic pricing of perishable food as a sustainable business model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Michael Scholz ◽  
Roman-David Kulko
Keyword(s):  
Willingness To Pay ◽  
Food Waste ◽  
Dynamic Pricing ◽  
Pricing Strategy ◽  
Pricing Strategies ◽  
Sustainable Business ◽  
Content Type ◽  
Food Retailers ◽  
Static Pricing ◽  
The Impact

PurposeThe purpose of this paper is to (1) investigate the effect of freshness on consumers' willingness to pay, (2) derive static and dynamic pricing strategies and (3) compare the effect of these pricing strategies on a retailer's revenue and food waste. This investigation helps to reveal the potentials of dynamic pricing strategies for building more sustainable business models.Design/methodology/approachThe authors conduct an online experiment to measure consumers' willingness to pay for fresh and three-days’ old strawberries. The impact of freshness on willingness to pay is analysed using univariate tests and regression analysis. Pricing strategies are compared using a Monte Carlo simulation.FindingsThe results of this study show that freshness largely determines consumers' willingness to pay and price sensitivity. This renders dynamic pricing a promising strategy from an economic point of view. The results of the simulation study show that food waste can be reduced by up to 53.6% with a dynamic pricing instead of a static pricing strategy in the case that there are as many consumers as strawberry packages in the inventory. Revenue can be increased by up to 10% compared to a static pricing strategy based on fresh strawberries.Practical implicationsThis study suggests that food retailers can improve their revenue when switching from static to dynamic pricing. Furthermore, in most cases, food retailers can reduce food waste with a dynamic instead of a static-pricing strategy, which might help to improve their image through a more sustainable business model and attract additional consumers.Originality/valueThis study is the first to analyse the possibility of using food freshness to design a dynamic pricing strategy and to analyse the impact of such a pricing strategy on both, a retailer's revenue and a retailer's food waste.

Consumer response to retail performance of organic food retailers

2014 ◽  
Vol 116 (2) ◽  
pp. 212-227 ◽  
Author(s):  
Edward Shih-Tse Wang ◽  
Bi-Kun Tsai
Keyword(s):  
Service Quality ◽  
Product Quality ◽  
Behavioral Intentions ◽  
Risk Perceptions ◽  
Organic Food ◽  
Consumer Trust ◽  
Price Fairness ◽  
Content Type ◽  
Food Retailers ◽  
Performance Dimensions

Purpose – Understanding how retail performance can reduce risk perceptions and influence behavioral intentions remains a key issue for researchers. Consumer evaluations of a retailer's performance may form their risk perceptions and positive behavioral intentions toward the retailer. This study aims to extend previous research by proposing an integrative model that examines how three retail performance dimensions (product quality, service quality, and price fairness) influence consumer trust, risk perceptions, and repatronage intentions in the context of organic food retailing. Design/methodology/approach – Empirical data were collected from face-to-face interviews guided by a structural questionnaire. Consumers of organic food retailers located in Taiwan were asked to participate in the research and 416 usable questionnaires were collected. Structural equation modeling (SEM) through LISREL 8.70 was used to analyze the data. Findings – Results show that both product quality and price fairness have direct effects on consumer trust, risk perceptions, and indirect effects (through trust in retailer and transaction risk perceptions) on the intent to revisit an organic food retailer. Service quality only affects consumer trust directly, but not perceived transaction risk. In addition, service quality does not have a significant indirect effect on revisit intention. Originality/value – This study is the first to research essential issues for understanding the role of retail performance dimensions on transaction risk perceptions in organic food marketing practices in Taiwan.

A laboratory exploration for multi-period perishable food pricing

2015 ◽  
Vol 117 (9) ◽  
pp. 2214-2233 ◽  
Author(s):  
Xiaohuan Wang ◽  
Zhi-Ping Fan ◽  
Yiming Wang ◽  
Manning Li
Keyword(s):  
Laboratory Experiment ◽  
Dynamic Pricing ◽  
Nonparametric Test ◽  
Pricing Strategy ◽  
Price Fairness ◽  
Content Type ◽  
Fairness Perception ◽  
Food Retailers ◽  
Food Freshness

Purpose – The purpose of this paper is to put forward a multi-period dynamic pricing strategy for perishable food considering consumers’ price fairness perception. The impacts of the multi-period retail price, food freshness and inventory shortage risk on consumers’ heterogeneous willingness to pay (WTP) and their strategic purchasing behaviours are studied. Design/methodology/approach – The authors present a price optimization model for perishable food, and conduct a laboratory experiment to justify the theoretical model. The data collected are analysed by correlation analysis and nonparametric test. Findings – The results obtained reveal, first, food freshness and inventory shortage risk have effect on consumers’ heterogeneous WTP. Second, different retail prices lead to consumers’ strategically purchasing behaviours. Finally, consumers’ intertemporal price fairness perception and the food retailer’s long-term utility maximization can be achieved by developing multi-period dynamic pricing strategy. Practical implications – This study suggests the perishable food retailer to apply a step-by-step price markdown strategy. It aims at eliminating price unfairness perceptions caused by loss of freshness and high shortage risk of the perishable food in the subsequent selling periods within the shelf life. Some valuable managerial insights towards perishable pricing for food retailers are discussed. Originality/value – This study serves as the first step to utilize a laboratory experiment to dig out consumers’ intertemporal WTP towards perishable food. It also presents a novel way for describing consumers’ intertemporal price fairness perception by equalizing consumers’ average utilities considering consumer surplus, food freshness and shortage risk at different selling periods. The line of research on dynamic pricing concerning consumers’ price fairness perception is quite new in academic research, and has arisen due to its importance for food retailers of maximizing their long-term revenues and also of constructing mutual benefit and lasting connections with the consumers.

scholarly journals Attaining fairness in construction cost consultancy pricing services

2016 ◽  
Vol 14 (4) ◽  
pp. 699-712 ◽  
Author(s):  
De-Graft Owusu-Manu ◽  
David John Edwards ◽  
Michael Adesi ◽  
Edward Badu ◽  
Peter E.D. Love
Keyword(s):  
International Trade ◽  
Literature Review ◽  
Random Sample ◽  
Design Methodology ◽  
Construction Cost ◽  
Pricing Strategies ◽  
Survey Questionnaire ◽  
Price Fairness ◽  
Content Type ◽  
Key Variables

Purpose Price fairness is important amongst construction and engineering consultants because a perceived lack of it engenders unwillingness to pay amongst clients. This can create contractual disputes that negatively impact upon a consultant’s ability to generate sufficient revenue to ensure business continuity and survival. With this in mind, this research aims to analyse the pricing measurement forces needed to attain pricing fairness within a Ghanaian construction cost consultancy practice. Specific objectives are to identify the key variables responsible for price fairness within cost consultant services and to establish any interrelationships between them. Design/methodology/approach This study leans towards the positivist methodological tradition by adopting a quantitative approach. A survey questionnaire was distributed to a random sample of 79 construction cost consultancies, drawn from a population of 372, who were registered with the Ghana Institution of Surveyors. Hypotheses developed from the literature review were then tested on data collected. Findings The analysis revealed that fairness of construction cost consultancy services pricing is significantly related to value and affordability, pricing objectives, pricing strategies, taxes and international trade and its effects on inputs for construction cost consultancy services. Originality/value The paper advances knowledge by providing a basis for the consideration of pricing forces in the valuing of construction cost consultancy services which hitherto has not been the case.

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