Valuation of New Products in Attribute Space

Abstract

We contribute to the literature on new product valuation by presenting a model of new product introduction based on the distance metric (DM) approach of Pinkse, Slade, and Brett (2002). Models based on the DM approach are capable of dealing with highly differentiated food categories that are often responsible for the lion's share of new product activity. Furthermore, since new products are typically characterized by differences in observable attributes, the DM approach is appropriate in that it directly accounts for such differences. Our findings reveal that consumers benefit from new products even when the number of alternatives is already high.

Market power and bargaining in agrifood markets: A review of emerging topics and tools

“…As a result, to obtain cross‐price coefficients, only a small number of coefficients equal to the number of “distance metrics” used in the analysis needs to be estimated, reducing the dimensionality of the problem . Empirical applications have combined the DM method with traditional demand systems, mainly LA/AIDS, in order to analyze demand, welfare, product entry, and profit margins in different markets, for example, the U.S. fruit juice market (Pofahl & Richards, ); the U.S. beer market (Rojas, ; Rojas & Peterson, ); the Italian yogurt market (Bonanno, ); the U.S. soft drinks market (Zhen, Brisette & Ruff, ); and food‐at‐home demand across food stores (Chenarides & Jaenicke, ). The number of applications of this method remain somewhat limited because the estimates obtained do not necessarily satisfy standard properties of demand systems (e.g., homogeneity and adding up).…”

Local brand entry and incumbent variety response: evidence from the ice cream market

“…For policy makers interested in promoting local foods, this study highlights the potential market impacts of new local brands and the associated increased competition. Previous studies have established the presence of consumer welfare benefits of brand introductions from the "variety effect" of having additional brands to choose from (Hausman and Leonard 2002;Petrin 2002;Pofahl and Richards 2009). In the food retail market, Arnade, Gopinath, and Pick (2011) find net consumer welfare increased from variety effects after new brand introductions in the potato chip market.…”

Product innovation and export strategy

“…The GNPD usually targets at manufacturers, retailers and suppliers who are involved in the marketing, sale, research, or innovation of new products and need to identify new trends (Solis, 2016) However, GNPD is also used as a source of information for scientific research: in (i) food and nutrition (Mitchell, 2008;Gallagher, 2009;Van Camp, Hooker, and Souza-Monteiro, 2010;Roodenburg et al, 2011;Van Camp, Hooker, and Chung-Tung, 2012;Menard et al, 2012;Slining, Ng, and Popkin, 2013;Martinez, 2013;Yangui, Costa-Font, and Gil, 2016;Souza-Monteiro and Hooker, 2017;Gilham, Hall, and Woods, 2018;Dickie, Woods, and Lawrence, 2018;Tennant and Bruyninckx, 2018), (ii) the environment (Gouin et al, 2012;Zhang et al, 2015), (iii) biotechnology (Bouwmeester et al, 2009;Jankovic et al, 2010;Lucas et al, 2015), (iv) management (Anselmsson and Johansson, 2009;Chrysochou, 2010;Barcellos, Grunert, and Scholderer, 2011;Krystallis and Chrysochou, 2011;Stanton et al, 2015;Rubera, Chandrasekaran, and Ordanini, 2016)) and (v) economics (Pofahl and Richards, 2009;Li and Hooker, 2009;Allender and Richards, 2010). In economics, GNPD is usually used to understand consumer behaviour; for example, Pofahl and Richards (2009) used GNPD to estimate the welfare effects on U.S. consumers resulting from the introduction of three bottled juice products. Allender and Richards (2010) used GNPD to estimate potential changes in California consumer surplus.…”