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Food Price Dynamics and Price Adjustment in the EU$
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Steve McCorriston

Print publication date: 2015

Print ISBN-13: 9780198732396

Published to Oxford Scholarship Online: November 2015

DOI: 10.1093/acprof:oso/9780198732396.001.0001

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Spatial and Temporal Retail Pricing on the German Beer Market

Spatial and Temporal Retail Pricing on the German Beer Market

Chapter:
(p.102) Chapter 5 Spatial and Temporal Retail Pricing on the German Beer Market
Source:
Food Price Dynamics and Price Adjustment in the EU
Author(s):

Jens-Peter Loy

Thomas Glauben

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198732396.003.0005

German consumers indicate a strong affection for locally produced beer brands and demand varies significantly throughout the year. Particularly, brands distributed nationwide need to consider consumer loyalty towards local brands (spatial pricing) and the seasonality of demand (temporal pricing) in their pricing strategy. Anderson and Kumar (2007) and Chevalier et al. (2003) develop models to derive hypotheses for the optimal spatial and temporal pricing strategies under these circumstances. Contrary to the neoclassical intuition, brands promote more aggressively on their home markets (strong brand loyalty) and in periods of peak demand. Employing retail scanner data for German beer, the chapter finds ample evidence to support these hypotheses, indicating that brand loyalty may be a dynamic concept and consumer search is more intensive in periods of high demand.

Keywords:   spatial pricing, temporal pricing, brand loyalty, scanner data, German beer

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