Product differentiation in the German soft drink market: which attributes matter?

ABSTRACT

In this study, we apply a hedonic pricing model to a unique data set of the German carbonated soft drink market. We distinguish between traditional brands and private label brands and include a variety of product attributes such as flavour, sugar content and bottle size in our analysis. Our results show that most traditional brands yield highest price premiums. However, organic niche products seem to be even more profitable. Also, unconventional flavours, small bottle sizes and retailing in supermarkets lead to higher price premiums. Private label brands are associated with highest negative price premiums.

KEYWORDS:

• Hedonic pricing
• price premium
• scanner data
• retailing
• private labels

JEL CLASSIFICATION:

• C23
• D21
• Q11
• Q13

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The households in the GfK Homescan Panel comprise a stratified random sample, selected on demographic as well as geographic targets. Stratification ensures that the sample represents the socio-demographic profile of consumers in Germany according to the German micro census (GfK 2017).