Implicit prices of product characteristics in the milk and cheese market

Abstract

Building a competitive advantage, which is based on differentiation, is more attractive to firms when many product characteristics are not perceptible prior to a purchase, as in the case of most food products. The hedonic price analysis is used in this paper to investigate the influence of food differentiation on consumer prices and to identify the implicit prices of product characteristics related to the milk and cheese market in Greece. Its results will help those involved in the milk and cheese industry to adopt the appropriate product development and product differentiation strategies on a national and international scale. The analysis results reveal that milk retail prices are influenced by fat content, production and processing conditions, product enrichment, and the size, type or form of packaging. Cheese prices are influenced by the origin of the milk (domestic, sheep or goat), packaging size and the protected designation of origin element.