Analysis of Consumer Buying Behavior: Price Discounts through Consumption Patterns of Instant Ramen

Abstract

This paper investigates the impacts of two indirect price discount channels (quantity discount and hypermarkets) on consumers by using the consumption data of instant ramen, which is attained from a consumer panel in Korea. The estimation results suggest that both effects are statistically significant; the decomposed discount effects of the multipack and the hypermarket are 10.7% and 4.3%, respectively. The savings benefit from the quantity discount channel is greater than that of the hypermarket channel. Hence, the implication of this paper is that the price gap between hypermarkets and small supermarkets can be reduced when the small supermarkets follow the strategy of the hypermarkets, i.e., giving quantity discounts.