Consumer brand choice: individual and group analyses of demand elasticity

Following the behavior-analytic tradition of analyzing individual behavior, the present research investigated demand elasticity of individual consumers purchasing supermarket products, and compared individual and group analyses of elasticity. Panel data from 80 UK consumers purchasing 9 product categories (i.e., baked beans, biscuits, breakfast cereals, butter, cheese, fruit juice, instant coffee, margarine and tea) during a 16-week period were used. Elasticity coefficients were calculated for individual consumers with data from all or only 1 product category (intra-consumer elasticities), and for each product category using all data points from all consumers (overall product elasticity) or 1 average data point per consumer (interconsumer elasticity). In addition to this, split-sample elasticity coefficients were obtained for each individual with data from all product categories purchased during weeks 1 to 8 and 9 to 16. The results suggest that: 1) demand elasticity coefficients calculated for individual consumers purchasing supermarket food products are compatible with predictions from economic theory and behavioral economics; 2) overall product elasticities, typically employed in marketing and econometric research, include effects of interconsumer and intraconsumer elasticities; 3) when comparing demand elasticities of different product categories, group and individual analyses yield similar trends; and 4) individual differences in demand elasticity are relatively consistent across time, but do not seem to be consistent across products. These results demonstrate the theoretical, methodological, and managerial relevance of investigating the behavior of individual consumers.