Brand-level Demand Analysis of Mayonnaise in Northeast Texas

Document Type

Thesis

Degree Name

Master of Science (MS)

Department

Agricultural Sciences

Date of Award

Fall 2016

Abstract

Mayonnaise is the most consumed condiment in the United States with the domestic consumers spending some $2 billion on its consumption and with a couple of brands controlling a significant portion of the market. However, the demand for mayonnaise at the brand level has not been studied extensively in previous research. In this study, the Barten synthetic model was estimated to investigate the demand for mayonnaise and competition among major mayonnaise brands (private label, Hellmann’s, Kraft, and other brands) in Northeast Texas. Fifty-two weekly observations used in this study were derived from scanner data ranging from January 1 through December 28, 2013. These data contained information on total quantity purchased and prices. The estimation results showed that the general Barten model was superior to other forms of demand systems for studying the demand for mayonnaise and competition among major mayonnaise brands in Northeast Texas. As evidenced by the uncompensated own-price elasticity estimates, the demand was inelastic for private label, Hellmann’s, and Kraft, and the demand for other brands was elastic. Inelastic demand at the brand level seems counterintuitive, but not if one considers the fact that mayonnaise normally does not have a significant share in a consumer’s budget. In addition, according to the uncompensated own-price elasticity estimates, to raise total revenue a price increase was suggested for private label, Hellmann’s, and Kraft, while a price decrease was suggested for other brands.

Advisor

Rafael Bakhtavoryan

Subject Categories

Agribusiness | Agricultural and Resource Economics | Agriculture | Life Sciences

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