Key market values for bottled wine in an emerging market: product attributes or business strategy?

This article focuses on the emerging bottled Chilean red wine market and studies the main determinants of the consumer price of wine sold on the domestic market. A hedonic price function was estimated for a sample of 810 wines using a quantile regression (QR) model. The database contains three variables groups to explain price: objective variables (national, international, and vine quality designations), subjective variables (wine score), and business strategies used by wine producers.Postprint (author's final draft

Heterogeneity and nonlinearity in consumers' preferences: An application to the olive oil shopping behavior in Chile

In relatively unknown products, consumers use prices as a quality reference. Under such circumstances, the utility function can be non-negative for a specific price range and generate an inverted U-shaped functio

Heterogeneity and nonlinearity in consumers’ preferences: An application to the olive oil shopping behavior in Chile

<div><p>In relatively unknown products, consumers use prices as a quality reference. Under such circumstances, the utility function can be non-negative for a specific price range and generate an inverted U-shaped function. The extra virgin olive oil market in Chile is a good example. Although domestic production and consumption have increased significantly in the last few years, consumer knowledge of this product is still limited. The objective of this study was to analyze Chilean consumer preferences and willingness to pay for extra virgin olive oil attributes. Consumers were segmented taking into account purchasing frequency. A Random Parameter Logit model was estimated for preference heterogeneity. Results indicate that the utility function is nonlinear allowing us to differentiate between two regimes. In the first regime, olive oil behaves as a conspicuous good, that is, higher utility is assigned to higher prices and consumers prefer foreign products in smaller containers. Under the second regime, Chilean olive oil in larger containers is preferred.</p></div

Relationship between utility and extra virgin olive oil price in Chile.

<p>Relationship between utility and extra virgin olive oil price in Chile.</p

Random parameter logit estimates for the linear and nonlinear models^a^,^b^,^c^,^d.

<p>Random parameter logit estimates for the linear and nonlinear models<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0184585#t002fn001" target="_blank">^a</a>^,<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0184585#t002fn002" target="_blank">^b</a>^,<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0184585#t002fn003" target="_blank">^c</a>^,<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0184585#t002fn004" target="_blank">^d</a>.</p

Attributes and attribute levels for each extra virgin olive oil.

<p>Attributes and attribute levels for each extra virgin olive oil.</p

Willingness to pay (WTP) for positive and negative slope utility^a.

<p>Willingness to pay (WTP) for positive and negative slope utility^a.</p

Example of choice card.

<p>Example of choice card.</p