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

Copyright 2012 Northeastern Agricultural and Resource Economics Association Branding of beef retail products has gained momentum in recent years. In 2004, 42 percent of beef retail products were branded, a fi gure 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 coeffi cients 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 benefi t from brand strategies because the brand identifi es a known set of attributes at a known level of quality and generally known price range relative to similar products (Owen, Wright, and Griffi th 2000). As such, product brands reduce consumers’ search costs and uncertainty about product performance.