A Firm-Level Demand Analysis of Milk by Using Scanner Data with Bargain Sale Information

Abstract

Each firm faces competition in its industry, therefore to cope with the competition, firms take various competitive strategies. Those strategies can be classified into three categories and these are; overall cost leadership, differentiation, and focus strategies. Particularly important of the three on the recent dairy industry is the differentiation approach. In addition, although a bargain sale is often considered as part of price approach, a cost strategy, it also has differentiation effects like non-price approach such as advertisement effects.
Hence in this paper we analyze the firm-level differentiation and the effects of bargain sale on milk sector from the consumer's perspective. LA/AIDS model is estimated with Scanner Data on data from 291 stores.
The main results are as the following:
1) The milk of Meiji Dairies Corporation is more differentiated than those of Nippon Milk Community and Morinaga Milk Industry.
2) Bargain sales are effective for Meiji Dairies Corporation and Nippon Milk Community. On the other hand, for Morinaga Milk Industry, they do not work well.