Responsiveness to price changes for major aquaculture products in U.S. retail markets

Abstract

Consumer preferences, purchasing behavior, and demand for seafood evolve over time. Measuring and understanding the effects of price changes on demand responses are critical to the design of effective marketing strategies for aquaculture producers. This study used a non‐linear Almost Ideal Demand System (non‐linear AIDS) model to estimate price, cross‐price, promotion, and expenditure elasticities for five major aquaculture frozen and refrigerated finfish fillet products in U.S. retail markets including salmon, tilapia, pangasius (swai/basa/tra), catfish, and trout. Results of price‐elasticity estimates showed that demand for pangasius, catfish, and trout was elastic, with the strongest elasticity for trout (highly responsive to price changes), while demand for salmon was inelastic; cross‐price elasticities revealed strong substitution for tilapia by pangasius, for pangasius by tilapia, and for trout by salmon. Weak substitution effects were found for tilapia by catfish and for salmon by trout. Expenditure elasticities were statistically significant and positive for all finfish evaluated, with the highest being for catfish followed by salmon. Promotional elasticities were found to significantly improve budget shares of salmon and trout but were not significant for tilapia, pangasius, or catfish. Hicksian price elasticities that compensated for consumer income effects of changing price levels showed strong substitution effects for tilapia by pangasius, for pangasius by tilapia, for catfish by salmon and tilapia, and for trout by salmon. Additional research on consumer price responsiveness is needed to further explore effects in specific U.S. cities and regional markets and to evaluate the effectiveness of specific messaging and non‐price marketing strategies for U.S. retail markets.