Product differentiation and brand building: a hedonic analysis of yogurt price in China

Abstract

The Chinese yogurt market has seen strong growth in recent years. To meet consumers’ diverse demand, yogurt manufacturers have invested substantially in product and brand strategies – they not only introduce new attributes to yogurt, but also create sub-brands with distinct product positioning. However, little is known regarding the effectiveness of these strategies. We fill this research gap by estimating the price premiums associated with main yogurt attributes and brands using a hedonic analysis framework. Our main findings are that plain flavored yogurt and yogurt with sugar are associated with negative price premiums while having fat, having probiotics, ambient and being designed for kids are associated with positive price premiums. Moreover, sub-brand effect plays an important role in consumer’s valuation of yogurt due to their distinct product positioning, and sub-brands that position themselves as natural, ambient, European-style, traditional style, fruits and grains, and for children have high price premium.